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Global Economic Worries Lead To Rally By Treasuries

Treasuries moved sharply higher during the trading day on Thursday, extending the upward trend seen over the past several sessions.

Bond prices climbed firmly into positive territory in morning trading and saw further upside going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 10.7 basis points to 2.554 percent.

With the steep drop on the day, the ten-year yield closed lower for the fifth straight session, slumping to its lowest closing level in almost a year.

Treasuries continued to benefit from concerns about the global economic outlook after tech giant Apple (AAPL) lowered its guidance for its fiscal first quarter.

In a letter to investors, Apple CEO Tim Cook said the company now expects fiscal first quarter revenue of approximately $84 billion compared to its previous forecast for revenue of $89 to $93 billion.

Cook attributed the lower guidance to a significantly greater than expected impact from economic weakness in some emerging markets.

Adding to the economic worries, the Institute for Supply Management released a report showing a much bigger than expected slowdown in the pace of growth in U.S. manufacturing activity in the month of December.

The ISM said its purchasing managers index tumbled to 54.1 in December after rising to 59.3 in November, slumping its lowest level since hitting 53.4 in November of 2016.

While a reading above 50 still indicates growth in manufacturing activity, economists had expected the index to show a more modest drop to a reading of 57.9.

Meanwhile, a report from payroll processor ADP showed much stronger than expected U.S. private sector job growth in December.

ADP said private sector employment surged up by 271,000 jobs in December after climbing by a downwardly revised 157,000 jobs in November.

Economists had expected an increase of about 178,000 jobs compared to the addition of 179,000 jobs originally reported for the previous month.

"Businesses continue to add aggressively to their payrolls despite the stock market slump and the trade war," said Mark Zandi, chief economist of Moody's Analytics. "At the current pace of job growth, low unemployment will get even lower."

On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report, which includes both public and private sector jobs.

Employment is expected to increase by 177,000 jobs in December after rising by 155,000 jobs in November, while the unemployment rate is expected to hold at 3.7 percent.

Along with the jobs report, trading on Friday may be impacted by reaction to comments by Federal Reserve Chairman Jerome Powell, who is due to participate in a joint discussion with former Fed Chairs Janet Yellen and Ben Bernanke.

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