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Treasury yields retreat after Fed flags recovery fears

U.S. government debt prices were higher Thursday morning after the Federal Reserve revealed concerns about the uncertainty of the country’s economic recovery.

At around 1:50 a.m. ET, the yield on the benchmark 10-year Treasury note was down at 0.6590% and the yield on the 30-year Treasury bond fell to 1.3935%. Yields move inversely to prices.

Minutes released Wednesday from the Federal Open Market Committee’s last monetary policy meeting showed that central bank policymakers see the U.S. recovery from the coronavirus-induced downturn as “highly uncertain.”

All eyes Thursday will be on initial jobless claims, set for publication at 8:30 a.m. ET. First-time jobless claims totaled 963,000 last week and are expected to come in at 925,000 for the week ending Aug. 15, according to a Reuters poll.

Geopolitical tensions remain on investors’ radar. Secretary of State Mike Pompeo on Wednesday warned Russia and China not to contravene the reimposition of UN sanctions on Iran. Pompeo has been instructed by President Donald Trump to trigger the measures at the UN Security Council in New York on Thursday.

Meanwhile, White House economic advisor Larry Kudlow told CNBC on Wednesday that Trump wants to prevent China from collecting some form of payment in a deal to sell TikTok, acknowledging that redirecting some of the payment to the U.S. Treasury would be “unusual.”

House Democrats on Wednesday unveiled a bill requiring mail-in ballots for November’s elections to be processed the same day, and pumping $25 billion into the U.S. Postal Service while erasing cost-cutting efforts from postmaster general and Trump ally Louis DeJoy. The House will vote on Saturday, but the legislation is unlikely to pass through the Republican-led Senate.

Auctions will be held Thursday for $30 billion of 4-week Treasury bills, $35 billion of 8-week bills and $7 billion of 30-year TIPS.

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