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Treasuries See Modest Strength Amid Fiscal Cliff Worries

Treasuries saw modest strength during trading on Wednesday, moving back to the upside after ending Monday's holiday-shortened session moderately lower.

After moving to the upside in morning trading, bond prices gave back some ground in the afternoon but still closed in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 1.6 basis points to 1.758 percent.

The modest strength among treasuries may have reflected lingering concerns about the looming fiscal cliff, as lawmakers have only a few days to reach a budget agreement before the year-end deadline.

While President Barack Obama is heading back to Washington later in the day after spending the holidays in Hawaii, the latest developments regarding the negotiations have not inspired much confidence.

Last week, House Speaker John Boehner, R-Ohio, scrapped plans to hold a House vote on his "Plan B" legislation due to a lack of support among members of his own party.

The legislation would have extended the Bush-era tax cuts for people making up to $1 million, although Democrats claimed it would raise taxes on millions of working families by eliminating certain tax credits.

Following the failure of "Plan B," Republicans attempted to put the pressure in the budget negotiations back on Obama and Senate Democrats.

Unless an agreement is reached, approximately $600 billion in automatic tax increases and government spending cuts are due to go into effect at the end of the year.

While reports on weekly jobless claims, new home sales, and consumer confidence are due to be released on Thursday, the data is likely to be overshadowed by any developments in Washington.

by RTTNews Staff Writer

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