NEW YORK (MarketWatch) — Treasury prices fell Thursday, sending yields higher for the third-consecutive session as investors make last-minute trades ahead of a much-watched jobs report.
Traders will be watching the data on January jobs creation — scheduled for release Friday morning — particularly carefully given that a December report showed exceedingly soft growth. The market is looking for signs of whether that number, and other recent weak data, were simply a disruption as a result of cold weather, or if the U.S. economic recovery is actually slowing. Economists forecast gains of 190,000 jobs.
"I suspect a lot of this is also position squaring. Some longs are getting out before the payrolls number," said Ira Jersey, interest-rate strategist with Credit Suisse Group AG.
Reuters 
Enlarge Image Mario Draghi, President of the European Central Bank (ECB), attempted to quell concerns about disinflation and the threat of deflation in the euro zone on Thursday The 10-year note (10_YEAR) yield, which rises as prices fall, was up 4 basis points at 2.706%. The 30-year bond (30_YEAR) yield rose 2.5 basis points to 3.678%, and the 5-year note (5_YEAR) yield climbed 3 basis points to 1.520%.
Treasury yields have been falling for most of the year thus far, as weaker data, pared with a reduction in the Federal Reserve's bond-buying stimulus program and frailty in emerging markets, sent investors into haven government debt.
But investors favored risk assets Thursday, with stocks rising sharply , which took away demand from safe assets like Treasurys, said Jersey.
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Treasurys were also hit by better-than-expected U.S. weekly jobless claims data on Thursday morning. The number of people applying for unemployment benefits fell by 20,000 to 331,000. Economists polled by MarketWatch had expected 337,000 applications. Jobless claims have been particularly volatile in recent weeks due to the winter weather.
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"The reading for the February 1 week is probably in line with underlying conditions. However, another series of severe winter storms in the following week could send filings higher again," said Terry Sheehan, economic analyst at Stone & McCarthy Research Associates, in a note.
Commerce Department data also showed a 12% climb in the trade deficit in December, after a sharp drop in November. The deficit rose to $38.7 billion, compared with $34.6 billion in November. Economists had expected a $36 billion reading. A widening trade deficit means the U.S. is buying more goods from its trading partners and selling less; it can be a negative signal about economic growth.
Haven euro zone bond yields moved higher as the European Central Bank sounded an upbeat note on the euro zone's economic recovery. Some had expected ECB President Mario Draghi to cut key interest rates, but instead the central banker attempted to quell concerns about disinflation and threat of deflation in the euro zone.
During the press conference, the euro (EURUSD) spiked against the dollar, European stocks (XX:SXXP) trimmed gains, and haven government debt yields climbed. The 10-year German bund (BX:TMBMKDE-10Y) , which rises as prices fall, was up 6 basis points at 1.606%, and the UK 10-year gilt (BX:TMBMKGB-10Y) yield is up 5.5 basis points at 2.745%, according to Tradeweb.
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