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Treasuries Come Under Pressure Amid Optimism About Tax Reform

Treasuries moved notably lower over the course of the trading day on Thursday, extending the downward move seen over the two previous sessions.

Bond prices saw modest weakness in morning trading before seeing further downside as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.1 basis points to 2.417 percent.

With the increase seen over the past three sessions, the ten-year yield ended the session at its highest closing level in a month.

The continued weakness among treasuries came as optimism about the outlook for tax reform reduced the appeal of treasuries after Senate Republicans cleared a key procedural hurdle.

The Senate voted 52 to 48 along party lines on Wednesday to begin formal debate on the GOP tax reform bill after negotiations convinced Republican holdouts to vote for the legislation.

The approval of the procedural motion sets the stage for a final Senate vote on the tax reform bill late Thursday or early Friday.

The vote came as Senate Republican leaders convinced some GOP holdouts that their concerns with the legislation would be addressed.

Adding to the optimism about the passage of the bill, Senator John McCain, R-Ariz., announced he would support the legislation.

Upbeat economic data also weighed on treasuries, with a Labor Department report showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended November 25th.

The report said initial jobless claims edged down to 238,000, a decrease of 2,000 from the previous week's revised level of 240,000.

Economists had expected jobless claims to inch up to 240,000 from the 239,000 originally reported for the previous week.

A separate report from the Commerce Department showed personal income increased by slightly more than expected in October, while personal spending rose in line with estimates.

The report said personal income climbed by 0.4 percent in October, matching the increase seen in September. Economists had expected income to rise by 0.3 percent.

The Commerce Department also said personal spending rose by 0.3 percent in October after climbing by a downwardly revised 0.9 percent in September.

Economists had expected spending to rise by 0.3 percent compared to the 1.0 percent jump originally reported for the previous month.

Meanwhile, MNI Indicators released a report showing a modest slowdown in the pace of growth in Chicago-area business activity in the month of November.

The outcome of a potential final Senate vote on the GOP tax reform bill may impact trading on Friday along with reports on manufacturing activity and construction spending.

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