WASHINGTON (dpa-AFX) - Treasuries have moved sharply higher during trading on Thursday, extending the upward move seen over the course of the previous session.
Bond prices surged early in the session and have remained firmly positive throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, has plunged 9.7 basis points to 5.093 percent.
The rally by treasuries comes despite the release of a report from the Labor Department showing producer prices in the U.S. shot up by much more than expected in the month of September.
The Labor Department said its producer price index for final demand jumped by 1.3 in September compared to economist estimates for a 0.5 percent increase.
The report also said the annual rate of growth by producer prices surged to 6.3 percent in September from an upwardly revised 5.6 percent in August, coming in well above expectations.
Despite the hotter-than-expected inflation data released over the past two days, CME Group's FedWatch Tool suggests the Federal Reserve is still likely to leave rates unchanged later this month.
'While we don't expect them to raise rates later this month (because it is so close to the mid-term election), we do think that they will increase the Fed Funds rate another 25 bps in December,' said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.
The initial surge by treasuries was partly attributed to an extended slump by tech stocks on Wall Street, with some investors purportedly rotating back into the relative safety of the bond market.
However, treasuries have continued to turn in a strong performance throughout the day even though the tech-heavy Nasdaq has rebounded from its lowest intraday level in a month and into positive territory.
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