Treasuries moved sharply lower over the course of the trading day on Wednesday, as traders expressed continued concerns about the Federal Reserve tapering its asset purchase program.
After moving modestly higher in early trading, bond prices pulled back firmly into negative territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.2 basis points to 2.026 percent.
With the strong gain on the day, the ten-year yield extended a recent upward trend, reaching its highest closing level in over two months.
The weakness among treasuries came as traders digested Congressional testimony from Federal Reserve Chairman Ben Bernanke as well as the release of the minutes of the latest Federal Open Market Committee meeting.
In prepared remarks before the Joint Economic Committee of Congress, Bernanke seemed supportive of leaving monetary policy unchanged in the near future.
The Fed chief told the committee that a premature tightening of monetary policy carries a substantial risk of slowing or ending the economic recovery.
However, Bernanke later acknowledged that upbeat economic data could lead the Fed to scale back its asset purchase program in the next few meetings.
Adding to the worries about the central bank slowing the pace of its asset purchases, the minutes of the FOMC meeting said a number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting.
While the Fed indicated that any tapering of the asset purchase program will depend on evidence of sufficiently strong and sustained growth, traders seem to expect incoming data to show signs of continued economic improvement.
Chris Low, chief economist at FTN Financial, said, "Every time an official tells investors the next move depends on incoming information, it reinforces the market view that tapering will come soon."
"The more they chatter, the higher yields seem to go," he added. "Hopefully we'll get a new plan from the Fed at the June meeting."
Trading on Thursday is likely to be impacted by the release of reports on weekly jobless claims and new home sales, although upbeat data may be viewed negatively in light of the comments from the Fed.
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Market Analysis
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.