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Treasuries Show Notable Move To The Upside

After ending the previous session slightly higher, treasuries saw further upside over the course of the trading session on Wednesday.

Bond prices moved steadily higher for much of the session before closing firmly in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.1 basis points to 2.322 percent.

The higher close by treasuries came following the release of some key economic data, including a report from the Labor Department showing a pullback in initial jobless claims in the week ended November 18th.

The report said initial jobless claims fell to 239,000, a decrease of 13,000 from the previous week's revised level of 252,000. Economists had expected jobless claims to drop to 240,000.

A separate report from the Commerce Department showed an unexpected drop in durable goods orders in the month of October, although the decrease primarily reflected a sharp pullback in volatile orders for transportation equipment.

The Commerce Department said durable goods orders tumbled by 1.2 percent in October after surging up by an upwardly revised 2.2 percent in September.

The decrease surprised economists, who had expected orders to edge up by 0.3 percent compared to the 2.0 percent increase that had been reported for the previous month.

Excluding the steep drop in orders for transportation equipment, durable goods orders rose by 0.4 percent in October after jumping by 1.1 percent in September. Ex-transportation orders had been expected to climb by 0.5 percent.

The University of Michigan also released a report showing a bigger than expected upward revision to its consumer sentiment index for November.

The report said the consumer sentiment index for November was upwardly revised to 98.5 from the preliminary estimate of 97.8. Economists had expected the index to be upwardly revised to 98.0.

While the consumer sentiment index was upwardly revised by more than expected, it remains below the thirteen-year high of 100.7 seen in October.

Treasuries saw continued strength following the release of the minutes of the Federal Reserve's monetary policy meeting.

The minutes said many participants thought that another near-term increase in interest rates was likely to be warranted if incoming information left the medium-term outlook broadly unchanged.

However, several participants indicated their decision about raising rates would depend on whether incoming data boosted their confidence that inflation was headed toward the Fed's 2 percent objective.

Following the release of the minutes, Paul Ashworth, Chief U.S. Economist at Capital Economics said, "A December rate hike is still the most likely outcome."

Following the Thanksgiving Day holiday on Thursday, trading activity on Friday is likely to be subdued amid a quiet day on the U.S. economic front.

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