WASHINGTON (dpa-AFX) - After ending the previous session slightly higher, treasuries showed a notable move to the downside during trading on Wednesday.
Bond prices came under pressure early in the session and remained stuck in the red throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed by 4.1 basis points to 2.339 percent.
The initial weakness among treasuries may partly have reflected optimism about tax cuts after Senator John McCain, R-Ariz., signaled he will vote in favor of a budget resolution Republicans intend to use as a vehicle for their tax reform plan.
Treasuries remained firmly negative following the release of the Federal Reserve's Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts.
The Beige Book said reports from the twelve districts indicated that economic activity increased in September through early October, with the pace of growth split between modest and moderate.
The Fed noted the Richmond, Atlanta, and Dallas Districts reported major disruptions from Hurricanes Harvey and Irma in some areas and sectors.
Employment growth was described as modest on balance, while the Fed said price pressures also remained modest since the previous report.
Earlier in the day, the Commerce Department released a report showing a much bigger than expected slump in housing starts in the month of September.
The Commerce Department said housing starts plunged by 4.7 percent to an annual rate of 1.127 million in September from the revised August estimate of 1.183 million. Housing starts has been expected to edge down by 0.5 percent.
With the hurricanes disrupting single-family home construction in the South, housing starts slumped to their lowest level since September of 2016.
Building permits, an indicator of future housing demand, also tumbled by 4.5 percent to an annual rate of 1.215 million in September from a revised 1.272 million in August. Economists had expected building permits to drop by 2.9 percent.
On Thursday, traders are likely to keep an eye on reports on weekly jobless claims, Philadelphia-area manufacturing activity and leading economic indicators.
The Treasury Department is also scheduled to announce the details of next week's auctions of two-year, five-year, and seven-year notes.
Copyright RTT News/dpa-AFX