Treasuries See Further Upside Following Inflation Data

Following the notable advance seen in the previous session, treasuries saw further upside during the trading day on Thursday.

Bond prices gave back ground after an early surge but remained in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.2 basis points to 3.397 percent.

The continued strength among treasuries came following the release of the Labor Department’s report on producer price inflation in the month of April.

The Labor Department said its producer price index for final demand inched up by 0.2 percent in April after falling by a revised 0.4 percent in March.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.5 percent drop originally reported for the previous month.

The report also showed the annual rate of producer price growth slowed to 2.3 percent in April from 2.7 percent in March. The pace of growth was expected to slow to 2.4 percent.

Following yesterday’s report on consumer price inflation, the data added to optimism the Federal Reserve will leave interest rates unchanged next month.

Treasuries may also have benefitted from their appeal as a safe haven as a separate Labor Department report showed initial jobless claims climbed to their highest level in well over a year in the week ended May 6th.

The report said initial jobless claims rose to 264,000, an increase of 22,000 from the previous week’s unrevised level of 242,000. Economists had expected jobless claims to inch up to 245,000.

With the much bigger than expected advance, jobless claims reached their highest level since hitting a matching number in the week ended October 30, 2021.

Reports on import and export prices and consumer sentiment may attract attention on Friday, with the latter including readings on inflation expectations.

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