Treasuries turned in a lackluster performance during trading on Wednesday despite the release of a relatively upbeat batch of U.S. economic data.
Bond prices bounced back and forth across the unchanged line before ending the session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.621 percent.
The choppy trading came in spite the release of separate reports showing bigger than expected increases in durable goods orders and pending home sales.
The Commerce Department released a report showing that durable goods orders jumped by 1.1 percent in May following a revised 0.2 percent decrease in April. Economists had expected orders to increase by 0.4 percent.
Excluding orders for transportation equipment, durable goods orders increased by a more modest 0.4 percent in May compared to a 0.6 percent drop in the previous month.
Additionally, a separate report from the National Association of Realtors showed much stronger than expected pending home sales growth in May.
NAR said its pending home sales index jumped 5.9 percent to 101.1 in May after falling 5.5 percent to 95.5 in April. Economists had expected pending home sales to show a much more modest 1.2 percent increase.
A pending sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Bond prices saw some volatility following the release of the results of the Treasury Department's auction of $35 billion worth of five-year notes but still remained near the unchanged line.
The five-year note auction drew a high yield of 0.752 percent and a bid-to-cover ratio of 2.61, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.97.
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 the release of the weekly jobless claims report and the Commerce Department's final report on first quarter GDP.
by RTT Staff Writer
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