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Treasuries Extend Upward Trend Ahead Of Jobs Report

Extending the upward trend seen over the past several sessions, treasuries moved moderately higher during trading on Thursday.

Bond prices pulled back off their best levels after an early advance but remained firmly positive. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 0.622 percent.

The ten-year yield closed lower for the fifth consecutive session after reaching its highest closing level in well over two months last Thursday.

Treasuries seemed to benefit from a sell-off on Wall Street, with some traders likely cashing in on the recent strength among stocks and moving money into bonds.

The continued strength among treasuries also reflected their appeal as a safe haven ahead of the release of the Labor Department's closely watched monthly jobs report on Friday.

Economists expect employment to jump by 1.400 million jobs in August after spiking by 1.763 million jobs in July, while the unemployment rate is expected to dip to 9.8 percent from 10.2 percent.

Ahead of the monthly report, the Labor Department released a report this morning showing first-time claims for U.S. unemployment benefits tumbled by more than expected in the week ended August 29th.

The Labor Department said initial jobless claims declined to 881,000, a decrease of 130,000 from the previous week's revised level of 1.011 million.

Economists had expected jobless claims to drop to 950,000 from the 1.006 million originally reported for the previous week.

However, Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics, noted the decrease in jobless claims was largely due to a shift by the Labor Department to a new seasonal adjustment process.

A separate report from the Institute for Supply Management showed a modest slowdown in the pace of growth in service sector activity in the month of August.

The ISM said its services PMI dipped to 56.9 in August from 58.1 in July, but a reading above 50 still indicates growth in the service sector. Economists had expected the index to edge down to 57.0.

Trading on Friday is likely to be driven by reaction to the Labor Department's monthly jobs report, which could have a significant impact on the economic outlook.

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