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Treasuries Pull Back Near The Unchanged Line After Seeing Early Strength

After moving to the upside in morning trading, treasuries pulled back near the unchanged line going into the close of trading on Wednesday.

Bond prices ended the day nearly unchanged. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.511 percent after hitting a one-month low of 2.455 percent.

The late-day pullback by treasuries came after Federal Reserve Chairman Jerome Powell dashed traders' hopes for a near-term interest rate cut.

In his post-monetary policy meeting press conference, Powell said the Fed sees "transitory factors" contributing to recent low inflation readings.

Powell said the Fed would take persistently low inflation into account when setting policy but currently expects inflation to return to the 2 percent objective.

The comments from Powell came after the Fed announced its widely expected decision to leave interest rates unchanged.

The Fed maintained the target range for the federal funds rate at 2.25 to 2.50 percent for the third consecutive meeting.

The central bank said information received since its previous meeting in March showed economic activity rose at a solid rate.

After the March meeting, the Fed noted the pace of economic growth had slowed from the solid rate in the fourth quarter.

The Fed said in its latest statement that the labor market remains strong but pointed out slower first quarter growth in household spending and business fixed investment.

With regard to inflation, the central bank said lower energy prices had contributed to lower annual inflation but noted inflation for items other than food and energy remains near 2 percent.

Treasuries moved to the upside earlier in the session following the release of a report from the Institute for Supply Management showing the slowest pace of growth in manufacturing activity in over two years.

The ISM said its purchasing managers index slid to 52.8 in April after unexpectedly climbing to 55.3 in March, hitting its lowest level since October of 2016.

A reading above 50 still indicates growth in the manufacturing sector, although economists had expected the index to show a much more modest decrease to 55.0.

Reports on weekly jobless claims, labor productivity and costs, and factory orders may attract some attention on Thursday, although trading activity may be subdued ahead of the more closely watched monthly jobs report due on Friday.

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