WASHINGTON (dpa-AFX) - Treasuries moved steadily lower over the course of the trading session on Wednesday, largely offsetting the strong upward move seen over the two previous sessions.
Bond prices came under pressure early in the session and saw further downside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.5 basis points to 2.049 percent.
The pullback by treasuries came after the ten-year yield ended the previous session at its lowest closing level since Election Day of 2016.
Optimism about a U.S.-China trade deal reduced the appeal of treasuries following comments from Treasury Secretary Steven Mnuchin.
Ahead of the highly anticipated G20 meeting between President Donald Trump and Chinese President Xi Jinping, Mnuchin told CNBC the U.S. and China had nearly completed a deal before talks broke down last month.
'We were about 90 percent of the way there and I think there's a path to complete this,' Mnuchin said in an interview with CNBC's Hadley Gamble but did not shed any light on the sticking points to achieving the final 10 percent.
Mnuchin refused to speculate on whether a deal would be completed but said he was 'hopeful,' noting 'President Trump and President Xi have a very close working relationship.'
Treasuries saw continued weakness following the release of the results of the Treasury Department's auction of $41 billion worth of five-year notes, which attracted average demand.
The five-year note auction drew a high yield of 1.791 percent and a bid-to-cover ratio of 2.35, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.37.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Meanwhile, traders largely shrugged off a report from the Commerce Department unexpectedly showing another steep drop in durable goods orders in the month of May.
The Commerce Department said durable goods orders tumbled by 1.3 percent in May after plunging by 2.8 percent in April. The continued decrease surprised economists, who had expected durable goods orders to rise by 0.2 percent.
Excluding another nosedive in orders for transportation equipment, durable goods orders rose by 0.3 percent in May after edging down by 0.1 percent in April. Economists had expected a 0.1 percent uptick.
Reports on first quarter GDP, weekly jobless claims, and pending home sales may attract some attention on Thursday, although trading activity is likely to be somewhat subdued ahead of the start of the G20 summit on Friday.
Bond trading could be impacted by reaction to the results of the Treasury Department's auction of $32 billion worth of seven-year notes.
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