By Luciana Lopez
NEW YORK, May 16 (Reuters) - U.S. Treasuries prices advanced on Thursday after economic data raised worries about the jobs market and underscored the absence of price pressures in the economy, fueling speculation the Fed might maintain its easing program for now.
Initial claims for state unemployment benefits jumped by 32,000 to a seasonally adjusted 360,000, the Labor Department said on Thursday. That was the biggest jump since November (Xetra: A0Z24E - news) and confounded analysts' expectations for a more modest increase.
Other data also pointed to a tepid economy. A sharp drop in gasoline costs led U.S. consumer prices to tumble in April by the most in over four years, and ground-breaking for new U.S. homes plummeted more than expected in April from an almost five-year high.
"There's plenty of slack in the labor market," said Tanweer Akram, senior economist with ING U.S. Investment Management in Atlanta (BSE: ATLANTA.BO - news) , Georgia.
"Based on the incoming information today, I think the Fed remains quite accommodative," he added. "Fed officials may have discussed exit strategies, but that's not an immediate exit plan."
The benchmark 10-year note gained 9/32 in price to yield 1.910 percent compared with 1.94 percent late on Wednesday.
The 30-year bond traded 20/32 higher to yield 3.128 percent compared with 3.1576 percent late on Wednesday.
Investors are now trying to figure out when the U.S. Federal Reserve could slow or even stop its easing program as the economy recovers.
The Fed is buying $85 billion per month in Treasuries and mortgage-backed securities in a bid to prop up the economy and boost employment.
But recent data have painted a mixed picture, with encouraging jobs figures interspersed with data showing a still-struggling manufacturing sector.
Still, with inflation pressures absent, some analysts say the Fed has little cause to worry that its policies will boost consumer prices beyond the central bank's target of 2 percent growth.
"Further falls in U.S. core inflation in the coming months may make some Fed officials concerned about very low inflation, or even deflation," said Paul Dales, senior U.S. economist with Capital Economics in Toronto.
That could give monetary policymakers scope to focus on the employment side of their dual mandate. With the unemployment rate still a full percentage point above the 6.5 percent the Fed wants to see, the labor market could remain a source of concern.
