Treasury yields fell near the lows of the year as bond traders bet the Friday jobs report will be worse than economists expect.
The 10-year was yielding 1.76 percent late in the day Thursday, in a move exaggerated by short-covering. Traders see support in that zone and also at 1.74, the 200-day moving average. Another big support area is 1.72 percent, the low from Dec. 31. The 10-year bond was yielding 1.81 Wednesday, and it was last at 1.76 percent in the beginning of January.
One trader said the market is void of supply with strong buying by the Fed this week. But the Bank of Japan's announcement that it plans its own huge asset purchase program is also fueling some buying.
The Street expects more Japanese buyers to prefer longer-dated Treasurys over lower-yielding Japanese government bonds, particularly with heightened uncertainty around North Korea.
"I would say what we're seeing is a fair amount of short-covering of positions that were in place for a strong or stronger nonfarm payroll print, and those expectations have been pulled back, quite frankly," said Ian Lyngen, senior Treasury trader at CRT Capital. "I think the combination of the ADP number and the ISM nonmanufacturing employment number, and this bounce in initial jobless claims has people looking for a nonfarm payroll printing closer to 155,000 than 200,000."
Reuters reports a consensus of 200,000 nonfarm payrolls for March, down sharply from 236,000 in February.