Treasuries closed modestly lower on Wednesday after seeing some volatility as traders digested the Federal Reserve's monetary policy announcement as well as the results of a five-year note auction.
Bond prices climbed well off their worst levels going into the close but still ended the day in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.3 basis points to 1.984 percent.
The statement released following the Federal Reserve's monetary policy meeting was largely unchanged from the previous statement, with the central bank leaving interest rates at near-zero levels.
The Fed also reiterated that economic conditions are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
At a press conference in Washington, Fed Chairman Bernanke assured that all policy tools remain at the Fed's disposal, but analysts say the Fed's optimistic outlook takes additional asset purchases off the table barring a turn for the worse for the economy.
Before the Fed announcement, the Treasury Department announced the results of its auction of $35 billion worth of five-year notes, which attracted above average demand.
The five-year note auction drew a high yield of 0.887 percent and a bid-to-cover ratio of 3.09, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.88.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Finishing off this week's series of long-term securities auctions, the Treasury is due to sell $29 billion worth of seven-year notes on Thursday.
Trading on Thursday could also be impacted by reports on weekly jobless claims and pending home sales in the month of March.
by RTT Staff Writer
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