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Treasury yields edge lower as Wall Street rally fades

The move higher for bond prices, a so-called safe haven, matched a move lower for stocks on Thursday morning. Equities have been surging this week on the back of dovish comments from Fed Chair Jerome Powell.

Powell on Tuesday fueled expectations that the U.S. central bank is moving closer to cutting interest rates. He said that the Fed will keep an eye on current developments in the economy, and would do what it must to “sustain the expansion.”

However, short-term U.S. government debt yields slumped on Wednesday after a gauge of private employment showed a sharp contraction in job creation in the month of May.

Markets will be monitoring ongoing global trade tensions, particularly the threat from President Donald Trump to impose a 5% tariff on all Mexican imports, in a political ploy criticized even by members of his own party.

On the data front, jobless claims, first-quarter productivity and unit labor cost figures are expected at 8.30 a.m. ET, along with April’s international trade figures. Investors will also be keeping an eye on the European Central Bank (ECB) which is set to announce its latest monetary policy decision Thursday.

The U.S. Treasury will auction $40 billion worth of four-week bills and $35 billion worth of eight-week bills on Friday.

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