$22 billion long-term bond auction arrives with employment data, U.S. Treasury prices dip slightly
Before the issuance of 30-year Treasury bonds and the announcement of employment data in the United States, U.S. Treasury prices fell slightly, leading to the smallest increase in five weeks. The yield on 10-year Treasury bonds rose by 1 basis point to 4.34%. JPMorgan Chase strategists expect the upcoming $22 billion bond auction to proceed smoothly, with current valuations providing significant support. Investors are focused on fiscal policy and the soon-to-be-released employment data, with initial jobless claims expected to rise slightly to 235,000. Swap trading indicates that the Federal Reserve may keep interest rates unchanged and cut rates twice before the end of the year
According to Zhitong Finance APP, ahead of the issuance of 30-year U.S. Treasury bonds and the release of employment data, U.S. Treasury prices fell slightly, narrowing the largest gain in five weeks.
On Thursday, the yield on the 10-year U.S. Treasury rose by 1 basis point to 4.34%, slightly recovering from a decline of 7 basis points on Wednesday due to strong demand for bond issuance. As the U.S. Treasury prepares to issue $22 billion in 30-year bonds, long-term bond yields have risen slightly.
The strategist team at JP Morgan, led by Jay Barry, stated that this auction should proceed "smoothly." They noted that current valuations provide support and that volatility is low. They also mentioned that the market's ability to absorb large orders has improved to levels seen before the tariff "liberation day."
Investors have recently focused on fiscal policy. Since U.S. President Donald Trump signed the tax cut bill last week, U.S. bond yields have continued to rise. The nonpartisan Congressional Budget Office estimates that the bill will increase the U.S. fiscal deficit by approximately $3.4 trillion over the next decade.
The borrowing costs for the UK government have also risen due to concerns that the government will be forced to issue more bonds to cover expenses. In Japan, bond yields surged by 20 basis points in the first two days of this week, as there are worries that Japanese politicians may loosen fiscal policy to gain voter support ahead of elections. Earlier on Thursday, the issuance of 20-year Japanese government bonds did not cause much of a stir, providing some relief to the bond market.
The upcoming U.S. employment data has also become a focal point. Economists expect that the number of initial jobless claims for the week ending July 5 will rise slightly to 235,000.
Evelyne Gomez-Liechti, a strategist at Mizuho International, stated, "The weekly initial jobless claims will be key to understanding the future direction of the Federal Reserve's policy." Swap trading suggests that the Federal Reserve will keep interest rates unchanged later this month and will cut rates twice by 25 basis points each before the end of the year
