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Treasuries Move Back To The Upside Amid Renewed Political Uncertainty

Following the sharp pullback seen in the previous session, treasuries moved back to the upside during trading on Thursday.

Bond prices moved higher early in the day and remained firmly positive throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.7 basis points to 1.685 percent.

The rebound by treasuries came amid renewed political uncertainty following the release of the whistleblower complaint that sparked the impeachment inquiry into President Donald Trump.

The document outlines concerns about Trump "using the power of his office to solicit interference from a foreign country in the 2020 U.S. election."

"This interference includes, among other things, pressuring a foreign country to investigate one of the President's main domestic political rivals," the complaint reads.

The complaint relates to Trump's calls on Ukrainian President Volodymyr Zelensky to conduct an investigation of former Vice President Joe Biden, the frontrunner for the Democratic presidential nomination.

On the U.S. economic front, the Commerce Department released its final report on U.S. gross domestic product in the second quarter, showing the pace of GDP growth was unrevised from the previous estimate.

The report said real GDP increased at an annual rate of 2.0 in the second quarter, unchanged from the previous estimate and in line with economist estimates.

The unrevised 2.0 percent GDP growth in the second quarter still reflects a notable slowdown compared to the 3.1 percent jump in the first quarter.

Meanwhile, a separate report from the National Association of Realtors showed a much bigger than expected rebound in pending home sales in the month of August.

NAR said its pending home sales index surged up by 1.6 percent to 107.3 in August after plunging by 2.5 percent to 105.6 in July. Economists had expected pending home sales to climb by 0.9 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Treasuries saw continued strength following the release of the results of the Treasury Department's auction of $32 billion worth of seven-year notes, which attracted slightly above average demand.

The seven-year note auction drew a high yield of 1.633 percent and a bid-to-cover ratio of 2.49, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.44.

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

Trading on Friday may be impacted by reaction to reports on durable goods orders, personal income and spending and consumer sentiment.

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