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Treasuries Close Firmly In The Red On Upbeat Economic Data

After coming under pressure following yesterday's monetary policy announcement from the Federal Reserve, treasuries saw further downside during trading on Thursday.

Bond prices moved notably lower in early trading and remained stuck in negative territory throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.1 basis points to 1.728 percent.

With the increase on the day, the ten-year yield extended a recent upward move, reaching its highest closing level in over a month.

The continued weakness among treasuries came on the heels of the release of a batch of largely upbeat U.S. economic data, including a report from the Labor Department showing that weekly jobless claims pulled back near a four-year low.

The report showed that jobless claims fell to 343,000 in the week ended December 8th, a decrease of 29,000 from the previous week's revised figure of 372,000. Economists had expected jobless claims to come in unchanged compared to the 370,000 originally reported for the previous week.

With the unexpected decrease, jobless claims fell to their lowest level since dropping to a four-year low of 342,000 in the week ended October 6th.

A separate report from the Commerce Department showed weaker than expected retail sales growth in the month of November, although a sharp drop in sales by gas stations offset strength in other sectors.

The report showed that retail sales increased by 0.3 percent in November following a 0.3 percent decrease in October. Economists had been expecting retail sales to increase by about 0.6 percent.

Excluding a 4.0 percent drop in sales by gas stations, retail sales rose by 0.8 percent in November compared to a 0.5 percent drop in October.

The Labor Department also said its producer price index fell by 0.8 percent in November following a 0.2 percent drop in October. Economists had been expecting prices to fall by about 0.5 percent.

Excluding a sharp drop in energy prices as well as an increase in food prices, the core producer price index edged up by 0.1 percent in November after dipping by 0.2 percent in October. Core prices had been expected to rise by 0.2 percent.

Traders also continued to digest yesterday's news that the Federal Reserve plans to replace its "Operation Twist" program, which expires at the end of the year, with the purchase of longer-term Treasury securities at a pace of $45 billion per month.

Trading on Friday could be impacted by the release of a pair of U.S. economic reports on consumer prices and industrial production.

by RTTNews Staff Writer

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