US Treasuries rebound on BOE’s aggressive policy easing; employment report eyed

The US Treasuries rebounded Thursday after the Bank of England lowered its bank rate to 0.25 percent with additional quantitative easing. However, investors clear focus remains on the July employment report on Friday.

The yield on the benchmark 10-year Treasury note fell 2 basis points to 1.521 percent and the yield on short-term 2-year note dipped ½ basis points to 0.667 percent by 12:40 GMT.

The central bank’s MPC meeting has ended the decisions with a 0.25 percent (25 basis points) cut of bank rate to a record low of 0.25 percent, from 0.5 percent previously. This was the first such move since March 2009.

It has also declared to increase the quantitative easing (QE) by an additional 60 billion pounds of gilt and top-tier corporate bond purchases of 10 billion pounds, which shall be financed via reserves issuance.

Though the bank rate cut was widely expected, but the quantitative easing was not factored in and neither was the forward guidance of the likelihood of a further cut in the Bank Rate to close to zero during the course of the year.

In terms of recent economic data release, the US Initial jobless claims for the week ending 30 July increased +3k to 269k, which was above the market expectations of 265k result as compared to the unrevised 266k reading seen in the week prior.

Meanwhile, the S&P 500 Futures traded 3 points higher at 2,160 by 12:40 GMT.