Bonds

10-year Treasury yield holds steady at 0.8% despite record jobless claims

U.S. government debt yields held steady on Thursday as investors digested a spike in jobless claims amid widespread coronavirus lockdowns.

The yield on the benchmark 10-year Treasury note was lower at about 0.80% while the yield on the 30-year Treasury bond was also down at 1.37%. The rates only fluctuated around these levels even after the record-breaking number of jobless claims. Bond prices rise as their yields fall.

The Labor Department said Thursday a total of 3.28 million Americans displaced by the coronavirus crisis filed unemployment claims.

The number shatters the Great Recession peak of 665,000 in March 2009 and the all-time mark of 695,000 in October 1982. The previous week, which reflected the period before the worst of the coronavirus hit, was just 282,000.

While the massive number underscored the outbreak's devastating toll on the economy, it came smaller than some of the estimates on Wall Street. Citigroup said it sees a figure closer to 4 million, for example.

The closure of American business has moved at a historic pace as state governments attempt to slow the virus's spread by ensuring that people keep a safe distance from each other. Economists warned, however, that the mass shuttering of everyday business could thrust the economy into a downturn in record time.

"Today holds the promise of being a defining day in the US rates market," wrote Ian Lyngen, head of rates strategy at BMO Capital Markets.

"Rates have repriced dramatically throughout 2020, as have equities and risk assets — that much is unmistakable," he continued. "The most relevant debate at the present moment is whether or not the economic negativity has gotten ahead of itself, or if there is another stage of adjusting to a weaker global growth and inflation profile yet to come."

The gloomy prognosis for jobless claims comes after a two-day risk asset rally as investors tried to buy equities on Tuesday and Wednesday at bargain prices despite the recent stock-market volatility. Much of the week's earlier optimism stemmed from investors' expectation that Congress would move ahead with its massive stimulus package to help juice the economy.

The Senate approved the $2 trillion fiscal package Wednesday night in a bid to shore up the economy as the coronavirus pandemic continues to spread, with more than 69,000 cases now confirmed in the U.S. and more than 1,000 deaths, according to Johns Hopkins University.

 CNBC's Patti Domm contributed to this report.

Treasurys