By Ben Eisen, MarketWatch

NEW YORK (MarketWatch) -- Treasury prices sank, sending benchmark yields sharply higher, after the latest report on jobless claims signaled further improvement in the labor market

The 10-year Treasury note (10_YEAR) yield, which rises as prices fall, was up 4.5 basis points early Thursday at 2.598%, its highest in over three weeks on a closing basis, according to Tradeweb. The yield is on track to mark its second consecutive day of rises.

The day's economic highlight showed the number of people applying for unemployment benefits rose by 23,000 last week to 302,000 a week after touching a 14-year low. Nonetheless, the four-week average fell below 300,000 for the first time since April 2006. The U.S. employment cost index surged in the second quarter.

The data come ahead of the monthly jobs report on Friday, which many believe will show continued upward momentum in the labor market.

Technical factors may also be at play in sending yields higher. The 10-year yield broke through its 40-day moving average Thursday morning, which "puts the channel top we've been watching at 2.632% into the play," according to David Ader, head of government bond strategy at CRT Capital Group LLC.

Other data on the calendar for Thursday include a Chicago PMI index reading of business conditions in the Chicago area.

The 2-year note (2_YEAR) yield rose half a basis point to 0.567%, marking a fresh high since the spring of 2011.

The 30-year bond (30_YEAR) yield rose 4.5 basis points to 3.355% while the 5-year note (5_YEAR) yield rose 2.5 basis points to 1.794%.

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