Treasuries Show Notable Pullback After Seeing Early Strength

After initially extending yesterday’s strong upward move, treasuries came under pressure over the course of the trading session on Thursday.

Bond prices pulled back well off their highs of the session and into negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 9.3 basis points to 3.585 percent after hitting a low of 3.369 percent.

The pullback by treasuries came as stocks on Wall Street showed a significant rebound after seeing early weakness.

Stocks rallied following a report from the Wall Street Journal indicating JPMorgan Chase (JPM), Morgan Stanley (MS) and several other big banks are discussing a potential deal with First Republic Bank (FRC).

People familiar with the matter told the Wall Street Journal the potential deal could include a sizable capital infusion to shore up the beleaguered lender.

First Republic is working on various potential options including a capital raise that could take various forms, the people told the journal.

News that Credit Suisse will borrow up to $54 billion from the Swiss central bank to shore up liquidity and investor confidence also helped ease recent concerns about turmoil in the banking sector.

In U.S. economic news, the Labor Department released a report showing first-time claims for U.S. unemployment benefits pulled back by more than expected in the week ended March 11th.

The report said initial jobless claims fell to 192,000, a decrease of 20,000 from the previous week’s revised level of 212,000.

Economists had expected jobless claims to slip to 205,000 from the 211,000 originally reported for the previous week.

A separate report released by the Labor Department showed import prices edged slightly lower in the month of February.

The Labor Department said import prices dipped by 0.1 percent in February after falling by a revised 0.4 percent in January.

Economists had expected import prices to slip by 0.2 percent, matching the decrease originally reported for the previous month.

The report also said import prices in February were down by 1.1 percent compared to the same month a year ago, reflecting the first annual decrease since December 2020.

Trading on Friday may be impacted by reaction to reports on industrial production and consumer sentiment, with the latter including readings on inflation expectations.

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