NEW YORK (CNN/Money) -
Treasury prices erased early losses Thursday after a regional manufacturing survey proved softer than expected, although activity was still high by historical standards.
But gains were slight as a report on the labor market showed better-than-expected results.
At around 3:45 p.m. ET, the benchmark 10-year note rose 5/32 of a point to 99-22/32 to yield 4.04 percent, down from 4.05 percent late Wednesday. The 30-year bond picked up 4/32 to 107 even to yield 4.90 percent versus 4.91 percent late Wednesday.
The two-year note added on 2/32 to 100-13/32 to yield 1.66 percent and the five-year note gained 3/32 of a point to 99-3/32 to yield 3.00 percent. Bond prices and yields move in opposite directions.
The dollar, meanwhile, continued the previous session's run against the yen, buying ¥107.20, up from ¥106.83 late Wednesday. The euro bought $1.2699, up from $1.2670 late Wednesday.
The Philadelphia Federal Reserve index of business activity dipped to a still robust 31.4 from 38.8 in January, surprising analysts who had looked for a pullback to 35.0.
The Philly Fed's business conditions index, however, dropped to 31.4 in February from 38.8 in January, while analysts polled by Reuters had expected a fall to just 35.0.
Many in the market had been braced for a strong number, given that the New York Fed survey released earlier this week had surprised on the upside.
Jobless claims dropped to 344,000 last week from a revised 368,000, beating analysts forecasts of a dip to 353,000, though continuing claims rose 106,000.
The monthly jobs survey was conducted this week, so the fall in claims could encourage some analysts to upgrade their forecasts for February payrolls. Others, though, were not so encouraged.
"In comparison with the last survey week, claims are 1,000 higher, and 7,000 more on a four-week moving average basis," noted economists at BNP Paribas, according to Reuters. "This near stability implies that the unemployment rates should hold steady at 5.6 percent."
Many analysts consider a strong and sustained recovery in jobs to be the minimum condition for the Fed to consider raising interest rates, so any sign of improvement in the labor market tends to hurt fixed-income debt.
Also out later is the weekly tally of U.S. debt held by the Fed on behalf of foreign central banks. These holdings have ballooned to a record $1.13 trillion over the past year as mainly Asian central banks invested the dollars they purchased in currency intervention.
--Reuters contributed to this report.
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