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Treasuries Close Modestly Lower Following Choppy Trading Day

Treasuries showed a lack of direction over the course of the trading session on Wednesday before ending the day modestly lower.

Bond prices spent the afternoon lingering near the unchanged line but moved to the downside going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.6 basis points to 1.577 percent.

The modestly lower close by treasuries came after the minutes of the Federal Reserve's latest monetary policy meeting showed the central bank intends to remain flexible regarding future changes to interest rates.

Citing a lack of clarity about when the risks to the U.S. economy will be resolved, the minutes said members plan to pay close attention to the implications of incoming data for the economic outlook.

During the meeting in late July, the members of the Fed voted 8 to 2 to lower the target range for the federal funds rate by 25 basis points to 2 to 2-1/4 percent.

The Fed is scheduled to hold its next monetary policy meeting September 17th and 18th, with CME Group's FedWatch Tool currently indicating at 97.3 percent chance of another 25 basis point rate cut.

The central bank is under increasing pressure to cut rates from President Donald Trump, who has repeatedly slammed Fed Chairman Jerome Powell's approach to monetary policy in posts on Twitter.

"Doing great with China and other Trade Deals. The only problem we have is Jay Powell and the Fed. He's like a golfer who can't putt, has no touch. Big U.S. growth if he does the right thing, BIG CUT - but don't count on him! So far he has called it wrong, and only let us down," Trump tweeted ahead of the release of the minutes.

He added, "We are competing with many countries that have a far lower interest rate, and we should be lower than them. Yesterday, 'highest Dollar in U.S. History.' No inflation. Wake up Federal Reserve. Such growth potential, almost like never before!"

Powell, who was nominated by Trump, is scheduled to deliver a closely watched speech on the challenges for monetary policy at the Jackson Hole Economic Policy Symposium in Jackson Hole, Wyoming, on Friday.

Michael Pearce, Senior U.S. Economist at Capital Economics, said the Fed minutes left the impression policymakers are just taking their cue from the bond markets.

"We will hopefully get more clarity on future rate cuts when Powell speaks on Friday but, at this point, there is little sign that the Fed is willing to push back on the markets," Pearce said.

He added, "As such, another 25bp cut in September still looks like a good bet, if only because the Fed will not want to disappoint lofty market expectations."

On the U.S. economic front, the National Association of Realtors released a report showing a notable rebound in existing home sales in the month of July.

NAR said existing home sales jumped by 2.5 percent to an annual rate of 5.42 million in July after slumping by 1.3 percent to a revised rate of 5.29 million in June.

Economists had expected existing home sales to surge up by 2.3 percent to a rate of 5.39 million from the 5.27 million originally reported for the previous month.

A report on weekly jobless claims may attract some attention on Thursday, although traders may stick to the sidelines ahead of Powell's speech on Friday.

For comments and feedback contact: editorial@rttnews.com

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