2020.12.1719:15:00UTC+00Treasuries Move Modestly Lower After Seeing Early Strength

After moving to the upside early in the session, treasuries moved modestly lower over the course of the trading day on Thursday.

Bond prices climbed off their worst levels in afternoon trading but remained in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1 basis point to 0.930 percent after hitting a low of 0.892 percent.

The dip by treasuries came amid positive developments on the stimulus front, with lawmakers signaling progress toward an agreement on a new relief package.

Following a meeting with other congressional leaders, Senate Majority Leader Mitch McConnell, R-Ken., said the talks have made "major headway toward hammering out a targeted pandemic relief package that would be able to pass both chambers with bipartisan majorities."

Senate Minority Leader Chuck Schumer, D-N.Y., agreed that the two sides are "close to an agreement" but cautioned that it's "not a done deal yet."

Meanwhile, House Speaker Nancy Pelosi's Deputy Chief of Staff Drew Hammill said the Speaker, Schumer and Treasury Secretary Steven Mnuchin spoke Wednesday night as part of a series of phone conversations to complete the relief negotiations.

"All three emphasized the urgency to reaching an immediate agreement and will exchange additional paper and resume conversations in the morning," Hammill said in a post on Twitter.

Treasuries initially benefited from a report from the Labor Department showing an unexpected increase in first-time claims for U.S. unemployment benefits in the week ended December 12th.

The report said initial jobless claims rose to 885,000, an increase of 23,000 from the previous week's revised level of 862,000.

The continued increase surprised economist, who had expected jobless claims to drop to 800,000 from the 853,000 originally reported for the previous week.

With the unexpected increase, jobless claims climbed to their highest level since hitting 893,000 in the week ended September 5th.

However, while the data has raised concerns about the outlook for the labor market, it could also put further pressure on lawmakers to reach an agreement on a stimulus bill.

Developments in Washington are likely to remain in the spotlight on Friday, overshadowing a report on leading economic indicators.