WASHINGTON (dpa-AFX) - After initially showing a lack of direction, treasuries moved sharply lower over the course of the trading session on Thursday.
Bond prices came under pressure in morning trading and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped by 10.7 basis points to 1.897 percent.
Treasuries showed a notable move to the downside after President Donald Trump expressed optimism about a potential U.S.-China trade deal.
'Getting VERY close to a BIG DEAL with China. They want it, and so do we!' Trump said in a post on Twitter this morning.
Trump has repeatedly expressed optimism about a trade deal but has previously suggested China wants to reach an agreement more than the U.S.
Treasuries saw some further downside after reports said negotiators have agreed on the terms of a phase one trade deal that now requires Trump's approval.
The latest developments on the trade front come as Trump is meeting with top trade advisers today to discuss current plans to raise tariffs on $160 billion worth of Chinese goods on December 15th.
A report from Reuters said officials circulated talking points ahead of the meeting downplaying the repercussions the new tariffs would have on the U.S. economy.
Three sources familiar with the plans told Reuters the senior trade advisers are expected to present divergent views during the high-stakes meeting, with the final decision up to Trump.
Reports earlier this week suggested the U.S. would likely delay imposing the new tariffs to avoid agitating China amid an ongoing negotiations toward a phase one trade deal.
The news on the trade front largely overshadowed a report from the Labor Department showing initial jobless claims spiked to a two-year high in the week ended December 7th.
Michael Pearce, Senior U.S. Economist at Capital Economics, said the jump in jobless claims 'most likely reflects seasonal adjustment problems around the Thanksgiving holiday rather than a genuine sudden deterioration in labor market conditions.'
A separate Labor Department report showed U.S. producer prices came in unchanged in the month of November, as higher prices for goods offset lower prices for services.
Meanwhile, the Treasury Department revealed that its auction of $16 billion worth of thirty-year bonds attracted well above average demand.
The thirty-year bond auction drew a high yield of 2.307 percent and a bid-to-cover ratio of 2.46, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.24.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Developments on the trade front are likely to remain in focus on Friday, potentially overshadowing reports on retail sales, import and export prices and business inventories.
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