WASHINGTON (dpa-AFX) - After giving back ground over the past few sessions, treasuries showed a lack of direction on Thursday as traders digested Federal Reserve Chairman Ben Bernanke's congressional testimony.
Bond prices recovered from early weakness and spent the rest of the session lingering near the unchanged line. The yield on the benchmark ten-year note, which moves opposite of its price, ended the day up by less than a basis point at 1.654 percent.
While treasuries saw early weakness on the heels of news of an unexpected interest rate cut in China, selling pressure waned not long after the start of trading.
The choppy trading seen for the remainder of the session came as traders kept a close eye on Bernanke's testimony before the Joint Economic Committee in Washington.
Bernanke said that U.S. economic growth appears poised to continue at a moderate pace and suggested that last week's disappointing jobs report may have reflected temporary factors.
While Bernanke said that Fed 'remains prepared to take action' if the economic situation worsens, he made no explicit reference to further easing measures.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said, 'It doesn't appear that the two weaker-than-expected payrolls reports in April and May were bad enough on their own to trigger a third round of quantitative easing at the next FOMC meeting in another couple of weeks.'
Meanwhile, traders largely shrugged off news that Fitch cut Spain's credit rating by three notches to BBB with a negative outlook.
Peter Boockvar, managing director at Miller Tabak, said that the ratings downgrade was not a surprise and just reflects Fitch playing catch up to the fiscal realities.
In other news, the Treasury Department announced the details of next week's auctions of three-year and ten-year notes and thirty-year bonds.
The Treasury said it plans to sell $32 billion worth of three-year notes next Tuesday, $21 billion worth of ten-year notes next Wednesday, and $13 billion worth of thirty-year bonds next Thursday.
Trading on Friday could be impacted by the release of reports on the U.S. trade balance and wholesale inventories, although any developments overseas are likely to take center stage.
Copyright RTT News/dpa-AFX
© 2012 AFX News
