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Treasuries See Further Upside As Stocks Extend Sell-Off

Treasuries moved notably higher during trading on Thursday, extending the upward move seen over the past few sessions.

Bond prices moved to the upside 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, slumped 10.4 basis points to 2.817 percent.

The ten-year yield closed lower for the fourth consecutive session after ending last Friday's trading at its highest closing level since November of 2018.

The continued advance by treasuries came as traders continued to look to relative safety of bonds amid an extended sell-off on Wall Street.

The major U.S. stocks indexes have once again fallen to their lowest levels in over a year amid worries about the Federal Reserve aggressively raising interest rates in an effort to combat elevated inflation.

Adding to the worries, the Labor Department released a report this morning showing the annual rate of producer price growth slowed by less than expected in the month of April.

The report showed the annual rate of growth in producer prices slowed to 11.0 percent in April from a record high 11.5 percent in March, although economists had expected a bigger slowdown to 10.7 percent.

Core producer prices, which exclude prices for food, energy and trade services, were up by 6.9 percent compared to a year ago, reflecting a modest slowdown from the 7.1 percent spike seen in the previous month.

A separate report released by the Labor Department unexpectedly showed a slight increase in first-time claims for U.S. unemployment benefits in the week ended May 7th.

The Labor Department said initial jobless claims crept up to 203,000, an increase of 1,000 from the previous week's revised level of 202,000.

The uptick surprised economists, who had expected jobless claims to dip to 195,000 from the 200,000 originally reported for the previous week.

Bond prices remained firmly positive as the Treasury Department revealed this month's auction of $22 billion worth of thirty-year bonds attracted above average demand.

The thirty-year bond auction drew a high yield of 2.997 percent and a bid-to-cover ratio of 2.38, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.31.

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

Looking ahead, trading on Friday may be impacted by reaction to reports on import and exports prices and consumer sentiment.

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