Labor Department's surprising drop in unemployment claims, expectation of ending Fed rate cuts push U.S. government bond prices lower.
Bond prices slip on positive government job report.ORK (AP) -- Treasury prices fell Thursday as investors, already anticipating an end to the Federal Reserve's rate-cutting campaign, found another reason to sell government bonds when a report showed a surprising drop in unemployment claims.
Investors have been concerned about the weak economy's effect on the labor market, and grew a little less worried after the Labor Department said initial claims for unemployment benefits fell by 33,000 last week to 342,000. Economists had forecast that claims last week rose by 3,000.
The four-week moving average - which helps investors look past week-to-week volatility - also fell, dropping by 7,250 to 369,500.
The government data followed a Wall Street Journal report predicting the Fed will probably lower its benchmark fed funds rate by another quarter point when it meets next week, but then take a pause.
A halt in rate cuts would indicate either that an economic recovery is in sight, or that inflation is becoming a bigger threat than slowing growth. Neither scenario makes Treasurys appear particularly attractive.
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Kristin Devlin
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Laguna Woods Homes and Real Estate
