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Treasuries See Further Downside As ECB Provides Additional Stimulus

Treasuries saw notable weakness during trading on Thursday, extending the significant move to the downside seen in the previous session.

Bond prices came under pressure early in the session and remained firmly negative throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.9 basis points to 0.820 percent.

The ten-year yield added to the 8.1 basis point jump seen on Wednesday, reaching its highest closing level since late March.

The continued weakness among treasuries came after the European Central Bank announced additional stimulus to deal with the economic fallout from the coronavirus pandemic.

The ECB announced that it will increase its Pandemic Emergency Purchase Programme by 600 billion euros. The bank announced plans to purchase 750 billion euros worth of government bonds back in March.

With the euro area facing its worst recession in decades due to the impact of the pandemic, the ECB's Governing Council also maintained its commitment to ease its policy stance further if needed.

Traders were also reacting to a report from the Labor Department showing first-time claims for U.S. unemployment benefits pulled back further off their record high in the week ended May 30th.

The Labor Department said initial jobless claims tumbled to 1.877 million, a decrease of 249,000 from the previous week's revised level of 2.126 million.

However, economists had expected jobless claims to slump to 1.800 million from the 2.123 million originally reported for the previous week.

Jobless claims pulled back further off the record high of 6.867 million set in the week ended March 28th, although the number of new claims since the coronavirus lockdowns now exceeds 42.6 million.

The report also showed an unexpected increase in continuing claims, a reading on the number of people receiving ongoing unemployment assistance, which jumped by 649,000 to 21.487 million in the week ended May 23rd.

Despite the weekly increase, economists at Oxford Economics noted continuing claims remain below their peak, suggesting "a small amount of rehiring may be starting to take place."

Trading on Friday is likely to be driven by reaction to the Labor Department's more closely watched monthly employment report for May.

Employment is expected to tumble by about 8.0 million jobs in May after plunging by 20.5 million jobs in April. The unemployment rate is expected to jump to 19.7 percent from 14.7 percent.

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