Treasuries Recover From Early Lows But Still Close In The Red

After moving sharply lower in early trading, treasuries regained ground over the course of the session on Thursday but still closed firmly negative.

Bond prices moved to the downside going into the close after climbing back near the unchanged line. As a result, the yield on the benchmark ten-year note, which moves opposite of its price climbed 5 basis points to 3.952 percent.

The ten-year yield reached a high of 4.080 percent in early trading, representing its highest intraday level in fourteen years.

The early sell-off by treasuries came following the release of the Labor Department’s highly anticipated report on consumer price inflation in the month of September.

The report showed consumer prices rose by more than expected in September, leading to ongoing concerns about the outlook for interest rates.

The Labor Department said its consumer price index rose by 0.4 percent in September after inching up by 0.1 percent in August. Economists had expected consumer prices to edge up by 0.2 percent.

Excluding food and energy prices, core consumer prices climbed by 0.6 percent for the second month compared to expectations for a 0.5 percent advance.

The report also showed the annual rate of growth by consumer prices slowed to 8.2 percent in September from 8.3 percent in August, although the annual rate of growth by core prices accelerated to a 40-year high of 6.6 percent from 6.3 percent.

“The disappointingly broad-based and high inflation readings will keep the Fed in an aggressive tightening mode and on course for at least another 125bps this year,” said Kathy Bostjancic, Chief U.S. Financial Economist at Oxford Economics.

Selling pressure waned over the course of the session, however, as some traders expressed optimism inflation has peaked.

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

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