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Treasuries Give Back Ground Following Recent Strength

Treasuries gave back some ground during trading on Thursday after moving to the upside over the three previous sessions.

Bond prices climbed off their worst levels going into the close but remained in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.1 basis points to 2.348 percent.

The pullback by treasuries came following the release of a report from the Labor Department showing a modest uptick in producer prices in the month of June.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in June after coming in flat in May. Economists had expected prices to remain unchanged.

Excluding food and energy prices, core producer prices also crept up by 0.1 percent in June after climbing by 0.3 percent in May. Core prices had been expected to rise by 0.2 percent.

Compared to the same month a year ago, producer prices were up by 2.0 percent in June, reflecting a slowdown compared to the 2.4 percent increase in May.

The annual rate of growth in core producer prices also slowed to 1.9 percent in June from 2.1 percent in the previous month.

A separate report from the Labor Department showed a slight decrease in first-time claims for unemployment benefits in the week ended July 8th.

The report said initial jobless claims dipped to 247,000, a decrease of 3,000 from the previous week's revised level of 250,000.

Economists had expected jobless claims to edge down to 245,000 from the 248,000 originally reported for the previous week.

Treasuries regained some ground following the release of the results of the Treasury Department's auction of $12 billion worth of thirty-year bonds, which attracted average demand.

The thirty-year bond auction drew a high yield of 2.936 percent and a bid-to-cover ratio of 2.31, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.27.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Today's thirty-year bond auction came after the Treasury sold $24 billion worth of three-year notes on Tuesday and $20 billion worth of ten-year notes on Wednesday.

Federal Reserve Chair Janet Yellen's second day of testimony on Capitol Hill also attracted attention, with the central bank chief appearing before the Senate Banking Committee.

Yellen's prepared remarks mirrored those she delivered to the House Financial Services Committee on Wednesday, when she said gradual interest rate hikes are likely to be appropriate over the next few years.

Trading on Friday may be impacted by reaction to closely watched reports on retail sales, consumer prices, and industrial production.

by RTTNews Staff Writer

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