NEW YORK (CNN/Money) -
Bonds retreated Thursday despite weak economic reports as investors brace themselves for payroll data due Friday. Traders are concerned the recent run-up in bond prices that took yields to five-month lows could reverse in a dramatic way if the figures prove strong.
At about 4:00 p.m. ET the benchmark 10-year note lost 24/32 of a point to 100-10/32, yielding 4.21 percent, up from 4.11 percent late Wednesday. The 30-year bond fell a point to 105-17/32 to yield 5.00 percent, up from 4.92 percent late Wednesday.
The two-year note dropped 4/32 to 99-27/32 to yield 2.46 percent and the five-year note lost 13/32 to 100-16/32 to yield 3.38 percent.
In currency trading, the dollar was mixed against the euro and the yen. The euro bought $1.2165, down from $1.2188 late Wednesday and the dollar bought ¥109.49, down from ¥109.61.
A government report showed that the rate of productivity growth was the slowest since late 2002, up at a 2.5 percent annual rate in the April-June quarter, revised down from the 2.9 percent pace reported last month. It was the slowest rise since the fourth quarter of 2002's 1.6 percent rate.
But the Labor Department's number was close to analysts' projections for a 2.7 percent rate.
Unit labor costs -- closely watched by economists as an early warning gauge for inflation pressures -- were revised down in the report. Costs gained at a 1.8 percent pace, off slightly from the 1.9 percent rate seen in the initial report. First-quarter unit labor costs were revised sharply lower, to falling at a 1.6 percent rate instead of rising at a 0.3 percent pace as estimated in the previous report.
The Labor Department also said that 362,000 people filed for jobless benefits in the week ended Aug. 28, up from 343,000 in the previous week.
The barometer of labor market conditions came in far worse than Wall Street forecasts of 340,000. Half the rise was attributed to Hurricane Charley, but claims still would have risen without the storm.
Data has been more erratic than usual, with seasonal and storm distortions making them of limited use for predicting labor market developments, said analysts. Still, with the August payrolls report just a day away, investors are highly sensitive to any news on jobs.
The jobless claims number, coming on the heels of two months of weak job growth, set a downbeat stage for the most highly anticipated release of the week, Friday morning's August employment report. Economists and investors hope it will give some guidance as to the strength of the U.S. economic recovery and whether the Federal Reserve will raise rates.
While Thursday's economic news did not indicate a return to faster growth, the Monster.com index of online job advertisements leaped to its highest level this year, leading some analysts to predict payrolls growth of 200,000 or more for August. The median forecasts in a Reuters survey are for payrolls to rise 150,000.
However, some analysts noted the Monster.com survey is only a year old and not seasonally adjusted.
"Some have claimed it has a good relationship with the payroll (report), but we do not see its relationship as very impressive," said David Sloan, an economist at 4CAST.
"There is no way of knowing how much of its recent moves are seasonal, though we suspect most was," said Sloan, who is looking for payrolls to rise only 100,000 in August.
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