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Treasuries Move Higher On Above Average Demand For Thirty-Year Bond Auction

After ending the previous session modestly higher, treasuries saw some further upside over the course of the trading day on Thursday.

Bond prices saw modest strength early in the session and climbed more firmly into positive territory in afternoon trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.6 basis points to 2.091 percent.

Additional buying interest was generated in reaction to the release of the results of the Treasury Department's auction of $16 billion worth of thirty-year bonds, which attracted above average demand.

The thirty-year bond auction drew a high yield of 2.607 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 2.26.

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

Treasuries also benefited from continued optimism tame inflation will lead the Federal Reserve to cut interest rates, with a Labor Department report showing bigger than expected decreases in U.S. import and export prices.

The Labor Department said import prices fell by 0.3 percent in May following a revised 0.1 percent uptick in April.

Economists had expected imports prices to dip by 0.2 percent compared to the 0.2 percent increase originally reported for the previous month.

Additionally, the report said export prices edged down by 0.2 percent in May after inching up by a revised 0.1 percent in April.

Export prices had been expected to slip by 0.1 percent compared to the 0.2 percent growth originally reported for the previous month.

With the bigger than expected monthly decreases, import and export prices both showed their biggest annual declines in over two years.

Meanwhile, a separate report from the Labor Department said first-time claims for U.S. unemployment benefits unexpectedly edged higher in the week ended June 8th.

The report said initial jobless claims inched up to 222,000, an increase of 3,000 from the previous week's revised level of 219,000.

The uptick came as a surprise to economists, who had expected jobless claims to edge down to 216,000 from the 218,000 originally reported for the previous week.

Another batch of U.S. economic data may impact trading on Friday, with traders likely to keep a close eye on reports on retail sales, industrial production, and consumer sentiment.

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