U.S treasury slumps on rallying crude

The U.S. Treasuries slumped on Thursday as oil prices snapped a 4-day losing streak on Thursday after a huge wildfire in Canada disrupted its oil sands production, while escalating fighting in Libya threatened the North African nation's output. Also, modest improvement in initial jobless claims drove out traders from safe assets. The yield on the benchmark 10-year bonds, which moves inversely to its price rose 2bps to 1.803 pct and the yields on 3-year bonds down 1 bps to 0.896 pct by 1220 GMT.

The U.S. Initial jobless claims increased 17k to 274k for the week ending 30 April, above expectations for a 262k result, from unrevised 257k in the previous week. The 4-week average was reported at 258k, from the unrevised 256k reading seen in the week prior. Meanwhile, continuing claims for week ending 23 April decreased to 2.121 million, as compared to the revised 2.129 million, previous was 2.130 million. The insured unemployment rate decreased to 1.5 pct, down from 1.6 pct. Today, crude oil prices jumped by more than 4 pct as a huge wildfire in Canada disrupted its oil sands production, while escalating fighting in Libya threatened the North African nation's output. The International benchmark Brent futures rose 3.34 pct to $46.09 and West Texas Intermediate (WTI) climbed 3.32 pct to $ 45.19 by 1225 GMT.

Yesterday, the ADP non-farm employment estimate decreased to 156k in April, which is below the market expectation of 195k, from revised 194k increase seen in March (previous was 200k). On the other hand, despite the weaker than expected increase seen in the headline reading, investors anticipate a 210k increase in non-farm payrolls on Friday, coupled with a 5pct headline unemployment rate. Moreover, the March Commerce Department trade balance report recorded downward pressure in the deficit to $40.4 billion, lower than the market expectation of $41.2 billion deficit, as compared to the revised deficit of $47.0 billion (previous was -$47.1 billion).

The markets will now focus on the up-coming comments from the FOMC Member Bullard (1530 GMT), Kaplan, Lockhart and Williams (2315), in an attempt to estimate the Fed's likely next step to raise interest rate. Apart from this, investors will also look forward to April non-farm payroll (1230 GMT) and April unemployment rate (1230) on Friday. Meanwhile, S&P 500 Futures rose 0.29 pts to 2,052.75 by 1225 GMT.