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U.S. Treasury debt prices extended losses on Thursday after an auction of five-year notes garnered surprisingly weak demand, including from indirect bidders.

That category includes customers of primary dealers but also foreign central banks, and it is therefore used as a proxy for offshore interest in U.S. government debt.

Already unnerved by a drop in jobless claims that reinforced the likelihood of further interest rate hikes from the Federal Reserve, traders kept bond prices well into negative territory.

“It was a terrible auction,” summed up one trader at a U.S. primary dealer. “The bid-to-cover stank, the indirect bid was bad — I would be surprised if the market manages to rally from here.”

The long-term yield on these notes remains lower than the short-term yield on 5-year notes, known as the inverted yield curve:

Historically, inversions of the yield curve have preceded many of the U.S. recessions. Due to this historical correlation, the yield curve is often seen as an accurate forecast of the turning points of the business cycle. A recent example is when the U.S. Treasury yield curve inverted in 2000 just before the U.S. equity markets collapsed. An inverse yield curve predicts lower interest rates in the future as longer-term bonds are being demanded, sending the yields down.