WASHINGTON (dpa-AFX) - Following the upward trend seen over the past several sessions, treasuries showed a lack of direction over the course of the trading day on Wednesday.
Bond prices spent most of the day lingering near the unchanged line before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by less than a basis point to 4.177 percent.
The choppy trading came following the release of a slew of U.S. economic data, including a Commerce Department showing the U.S. economy unexpectedly shrank in the first three months of 2025.
The Commerce Department said real gross domestic product fell by 0.3 percent in the first quarter after surging by 2.4 percent in the fourth quarter of 2024. Economists had expected GDP to rise by 0.4 percent.
The unexpected dip by GDP primarily reflected an increase in imports, which are a subtraction in the calculation of GDP.
Imports skyrocketed by 41.3 percent in the first quarter as businesses rushed to import goods before tariffs went into effect, subtracting 5.0 percentage points from GDP growth.
A decrease in government spending also weighed on GDP, while increases in investment, consumer spending and exports helped limit the downside.
However, the report also showed a sharp increase by consumer price during the quarter, leading to some uncertainty about the outlook for interest rates.
The Commerce Department said its personal consumption expenditures price index spiked by 3.6 percent in the first quarter following a 2.4 percent jump in the fourth quarter.
Excluding food and energy prices, the core PCE price index shot up by 3.5 percent in the first quarter compared with a 2.6 percent surge in the fourth quarter.
'The quandary facing the Federal Reserve is that while the trend in the data is clearly showing a slowing economy, it also renewed upward pressure on inflation,' said Mortgage Bankers Association MBA SVP and Chief Economist Mike Fratantoni.
He added, 'We expect that the Fed will hold rates steady at its meeting next week and will indicate that it will continue to hold at this level until it becomes clear whether a recession or inflation is the bigger risk.'
Payroll processor ADP also released a report showing private sector employment in the U.S. increased by much less than expected in the month of April.
ADP said private sector employment climbed by 62,000 jobs in April after surging by a downwardly revised 147,000 jobs in March.
Economists had expected private sector employment to jump by 125,000 jobs compared to the addition of 155,000 jobs originally reported for the previous month.
Reports on weekly jobless claims and manufacturing activity are likely to attract attention on Thursday along with any developments on the trade front.
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