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Treasuries Extend Thursday's Substantial Move To The Upside

Following the substantial increase seen over the course of the previous session, treasuries saw some further upside during trading on Friday.

Bond prices moved higher early in the session and remained firmly positive throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.9 basis points to 1.855 percent.

The ten-year yield extended the nosedive seen on Thursday to once again end the session at its lowest closing level since November of 2016.

Treasuries continued to benefit from their appeal as a safe haven after President Donald Trump announced plans to impose a 10 percent tariff on the remaining $300 billion worth of Chinese imports.

Trump revealed the plan shortly after U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin wrapped up the latest round of trade talks in Shanghai.

The president accused China of failing to follow through on pledges to buy large quantities of U.S. agricultural products and stop the sale of Fentanyl to the U.S.

The new tariffs announced by Trump represent the latest escalation in the trade war between the U.S. and China, which has been a dark cloud over the global economy for over a year.

In typical fashion, China responded to Trump's announcement by threatening to take necessary countermeasures to protect the country's interests.

Traders were also reacting to a closely watched Labor Department report showing U.S. job growth slowed in the month of July but came in line with economist estimates.

The report said non-farm payroll employment climbed by 164,000 jobs in July after jumping by a downwardly revised 193,000 jobs in June.

Economists had expected employment to increase by 164,000 jobs compared to the spike of 224,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate held at 3.7 percent in July, unchanged from June and in line with economist estimates.

"Overall, this report won't be enough to move the needle much in either direction as far as a September rate cut is concerned, but it reinforces our sense that another move next month isn't yet as sure a thing as the markets are now pricing in," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

Following the slew of major economic events this past week, the economic calendar for next week is relatively sparse.

Traders are still likely to keep an eye on reports on service sector activity and producer prices as well as the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.

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