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Treasuries Regain Ground Following Recent Weakness

After moving sharply lower over the three previous sessions, treasuries regained some ground during trading on Wednesday.

Bond prices initially moved higher and saw some further upside as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.2 basis points to 1.814 percent.

Bargain hunting contributed to the early strength among treasuries, with the ten-year yield pulling back off its highest closing level in nearly two months.

Treasuries saw further upside after a report from Reuters said a meeting between President Donald Trump and Chinese President Xi Jinping could be delayed until December.

A senior Trump administration official told Reuters discussions continue over terms of phase one of the trade deal and a venue for a meeting between Trump and Xi.

Sites in Europe and Asia have been suggested for the meeting, with Sweden and Switzerland among the possibilities, while Trump's suggestion of Iowa appears to have been ruled out, the official said.

The official said China's latest push for more tariff rollbacks was not expected to derail progress toward an interim deal but noted that it was still possible an agreement would not be reached.

Treasuries remained firmly positive after the Treasury Department revealed this month's auction of $27 billion worth of ten-year notes attracted above average demand.

The ten-year note auction drew a high yield of 1.809 percent and a bid-to-cover ratio of 2.49, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.42.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Looking ahead, the Treasury is due to announce the results of its auction of $19 billion worth of thirty-year bonds on Thursday.

A report on weekly jobless claims may also attract attention on Thursday, although traders are likely to remain focus on any news regarding a trade deal.

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