Treasuries Close Modestly Higher Following Thirty-Year Bond Auction

Treasuries showed a lack of direction in morning trading on Thursday but moved modestly higher as the day progressed.

Bond prices moved to the upside in afternoon trading after spending the morning lingering near the unchanged line. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.4 basis points to 1.711 percent.

The ten-year yield continued to give back ground after reaching a two-year high above 1.8 percent during trading on Monday.

Treasuries seemed to benefit from a positive reaction to the results of the Treasury Department's auction of $22 billion worth of thirty-year bonds, which attracted above average demand.

The thirty-year bond auction drew a high yield of 2.075 percent and a bid-to-cover ratio of 2.35, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.29.

Earlier this week, the Treasury revealed this month's auctions of three-year and ten-year notes also attracted slightly above average demand.

Traders were also digesting another reading on U.S. inflation, with a report from the Labor Department showing only a slight uptick in U.S. producer prices in the month of December.

The Labor Department said its producer price index for final demand edged up by 0.2 percent in December after jumping by an upwardly revised 1.0 percent in November.

Economists had expected producer prices to rise by 0.4 percent compared to the 0.8 percent increase originally reported for the previous month.

The report also showed the annual rate of producer growth slowed to 9.7 percent in December from a record high 9.8 percent in November.

Meanwhile, a separate report from the Labor Department showed an unexpected increase in initial jobless claims in the week ended January 8th.

The report said initial jobless claims rose to 230,000, an increase of 23,000 from the previous week's unrevised level of 207,000. Economists had expected jobless claims to edge down to 200,000.

Trading on Friday may be impacted by reaction to a slew of U.S. economic data, including reports on retail sales, industrial production and consumer sentiment.

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