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Treasuries Extend Upward Move Amid Ongoing Geopolitical Tensions

After showing a notable decline in the previous session, treasuries saw some further downside during trading on Thursday.

Bond prices came under pressure early in the session and remained stuck in the red throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 2.212 percent.

The ten-year yield added to the 4.2 basis point loss posted on Wednesday, falling to its lowest closing level in well over a month.

Geopolitical concerns contributed to the continued strength among treasuries amid an ongoing escalation in tensions between the U.S. and North Korea.

A statement from the North Korean military called President Donald Trump's warning that the communist nation would face "fire and fury" if it continued its provocations a "load of nonsense."

North Korea claimed "only absolute force" can work on someone as "bereft of reason" as Trump and detailed plans to fire a salvo of missiles into waters around the U.S. Pacific territory of Guam.

The rhetoric between the U.S. and North Korea has continued to heat up, leading traders to look to safe havens such as gold and treasuries.

On the economic front, the Labor Department released a report showing an unexpected drop in U.S. producer prices in the month of July.

The Labor Department said its producer price index for final demand edged down by 0.1 percent in July after inching up by 0.1 percent in June. Economists had expected another 0.1 percent uptick.

Excluding food and energy prices, core producer prices still dipped by 0.1 percent in July after creeping up by 0.1 percent in June. Core prices had been expected to rise by 0.2 percent.

A separate report from the Labor Department showed an unexpected uptick in initial jobless claims in the week ended August 5th.

The report said initial jobless claims crept up to 244,000, an increase of 3,000 from the previous week's revised level of 241,000.

Economists had expected jobless claims to come in unchanged compared to the 240,000 originally reported for the previous week.

Meanwhile, traders largely shrugged off the results of the Treasury Department's auction of $15 billion worth of thirty-year bonds, which attracted average demand.

The thirty-year bond auction drew a high yield of 2.818 percent and a bid-to-cover ratio of 2.32, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.29.

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 $23 billion worth of ten-year notes on Wednesday.

A report on consumer price inflation is likely to attract attention on Friday, with consumer prices expected to rise by 0.2 percent in July.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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