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Treasuries Finish Choppy Trading Day Roughly Flat

After trending lower over the past few sessions, treasuries showed a lack of direction throughout the trading day on Wednesday.

Bond prices spent the day bouncing back and forth across the unchanged line before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day unchanged at 2.592 percent.

Choppy trading on Wall Street carried over to the bond markets as traders digested a mixed batch of earnings news from big-name companies such as PepsiCo (PEP), Morgan Stanley (MS), Netflix (NFLX) and IBM Corp. (IBM).

PepsiCo and Morgan Stanley posted notable gains after reporting quarterly results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, Netflix and IBM moved to the downside after both reported better than expected earnings but on weaker than expected revenues and provided disappointing guidance.

The lackluster performance continued as the Federal Reserve's Beige Book said U.S. economic activity expanded at a slight-to-moderate pace in March and early April.

A compilation of anecdotal evidence on economic conditions in the twelve Fed districts, the Beige Book said most districts reported that growth continued at a similar pace as the previous report, while a few districts reported some strengthening.

The Beige Book showed reports from the Fed districts indicated generally positive economic conditions in various sectors but noted some caveats.

For instance, the report said reports on manufacturing activity were favorable, although contacts in many districts noted trade-related uncertainty.

Reports of stronger home sales in most districts were similarly tempered by indications of low demand for higher-priced homes.

Looking ahead, the Fed said there was little change in the economic outlook, with contacts in reporting districts expecting slight-to-modest growth in the months ahead.

The release of the Beige Book comes as the Fed is scheduled to hold its next two-day monetary policy meeting on April 30th and May 1st.

CME Group's FedWatch tool currently indicates a 99.5 percent chance the Fed will leave interest rates unchanged at its next meeting.

Reaction to the latest earnings news may continue to impact trading on Thursday, although traders are also likely to keep an eye on reports on retail sales, weekly jobless claims, and leading economic indicators.

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