WASHINGTON (dpa-AFX) - Treasuries showed a notable move to the upside during trading on Thursday, extending the strong upward move seen in the previous session.
Bond prices remained firmly positive throughout the day after an early advance. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 5.5 basis points to 4.357 percent.
The ten-year yield added to the 6.2 basis points slump seen on Wednesday, falling to its lowest closing level in a month.
The continued strength among treasuries came as traders reacted to the latest U.S. inflation data, with a report from the Labor Department showing producer prices crept up by less than expected in the month of May.
The Labor Department said its producer price index for final demand inched up by 0.1 percent after slipping by a revised 0.2 percent in April.
Economists had expected producer prices to rise by 0.3 percent compared to the 0.4 percent decline originally reported for the previous month.
Meanwhile, the report said the annual rate of growth by producer prices accelerated to 2.6 percent in May from 2.5 percent in April, in line with economist estimates.
'For the second day in a row, inflation data came in lower than expected and this gives the Fed room to sit on their hands,' said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.
He added, 'As long as inflation isn't increasing - or even better, is decreasing - the Fed can be patient and wait for more information on how the new tariffs and trade negotiations are going to impact the price stability part of their dual mandate later this year.'
A separate report released by the Labor Department on Wednesday showed a slight increase by consumer prices in the U.S. in the month of May.
Traders may also have benefitted from their appeal as a safe haven amid concerns about rising Middle East tensions.
Trading on Friday may be impacted by reaction to preliminary readings on consumer sentiment and inflation expectations in the month of June.
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