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Treasuries Extend Upward Move Amid Renewed Trade Uncertainty

After moving higher over the course of the previous session, treasuries saw some further upside during trading on Wednesday.

Bond prices moved notably higher early in the day and remained firmly positive throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.9 basis points to 1.870 percent.

With the continued decrease on the day, the ten-year yield pulled back further off the three-month closing high set last Friday.

Treasuries continued to benefit from renewed uncertainty about a potential U.S.-China trade deal after President Donald Trump failed to offer many details about the trade talks in a speech on Tuesday.

In remarks at the Economic Club of New York, Trump claimed the Chinese are "dying to make a deal" and an agreement is "close," although investors had been hoping for more substantive comments.

The president said a significant phase one trade deal with China "could happen soon" but stressed that he would only accept an agreement that is good for U.S. companies and workers.

Trump later denied that his trade war with China is hurting industry or causing uncertainty and threatened further increases in tariffs if a deal is not reached.

Treasuries moved to the upside late in the trading day after a report from the Wall Street Journal said the U.S.-China trade talks have hit a snag over Chinese purchases of U.S. agricultural products.

While Trump has said China agreed to buy up to $50 billion in agricultural products a year, people familiar with the matter told the Journal that China is leery of putting a numerical commitment in the text of a potential agreement.

Meanwhile, traders largely shrugged off Federal Reserve Chairman Jerome Powell's testimony before Congress, as he reiterated that the central bank is likely to leave interest rates on hold in the near future.

Powell told members of the Joint Economic Committee that the Fed would leave rates at their current level unless there is a material change in the economic outlook.

The Fed chief is due to testify on Capitol Hill again on Thursday, although traders are likely to pay closer attention to news on the trade front.

Reports on weekly jobless claims and producer price inflation are also likely to be ignored in favor of the latest reports about the state of U.S.-China trade talks.

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