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Treasuries Show Moderate Move To The Downside

Extending the pullback seen over the two previous sessions, treasuries moved to the downside during trading on Wednesday.

Bond prices slid to new lows going into the close of trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.4 basis points to 2.195 percent.

The lower close by treasuries came following the release of a Labor Department report on producer prices in the month of August.

The Labor Department said its producer price index for final demand edged up by 0.2 percent in August after slipping by 0.1 percent in July. Economists had expected the index to climb by 0.3 percent.

Excluding food and energy prices, core producer prices inched up by 0.1 percent in August after dipping by 0.1 percent in July. Core prices had been expected to rise by 0.2 percent.

Compared to the same month a year ago, producer prices were up by 2.4 percent in August, a notable acceleration from the 1.9 percent growth seen in July.

The year-over-year growth in core consumer prices also accelerated to 2.0 percent in August from 1.8 percent in July.

Treasuries saw further downside following the release of the results of the Treasury Department's auction of $12 billion worth of thirty-year bonds, which attracted below average demand.

The thirty-year bond auction drew a high yield of 2.790 percent and a bid-to-cover ratio of 2.21, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.28.

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

Trading on Thursday may be impacted by reaction to reports on consumer price inflation and weekly jobless claims.

by RTTNews Staff Writer

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