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Treasuries Extend Upward Move Amid Renewed Uncertainty About Trade Deal

Treasuries moved notably higher over the course of the trading day on Wednesday, extending the upward move seen over the two previous sessions.

Bond prices saw initial strength and climbed more firmly into positive territory as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.8 basis points to 1.738 percent.

Treasuries initially benefited from renewed uncertainty about a U.S.-China trade deal after a report from the Wall Street Journal said trade talks are in danger of hitting an impasse.

Citing former administration officials and others following the talks, the WSJ said the potential impasse threatens to derail the Trump administration's plan for a limited phase one deal this year.

The Journal said both sides remain divided over core issues, including China's demand for removing tariffs and the U.S.'s insistence on China buying farm products.

The report from the WSJ comes after President Donald Trump threatening higher tariffs on Chinese goods if an agreement is not reached.

"If we don't make a deal with China, I'll just raise the tariffs even higher," Trump said during a cabinet meeting at the White House on Tuesday.

Trump said he was happy with the current trade situation, citing the billions of dollars brought in by tariffs, and declared, "China is going to have to make a deal that I like."

Treasuries saw further upside in afternoon trading after a report from Reuters said completion of a phase one U.S.-China trade deal could slide into next year.

Trade experts and people briefed on the talks told Reuters a deal is still elusive and negotiations may be getting more complicated.

Reuters said the delay in signing the deal comes as China presses for more extensive tariff rollbacks, and the Trump administration counters with heightened demands of its own.

News on the trade front is likely to remain in focus on Thursday, potentially overshadowing reports on weekly jobless claims, existing home sales and Philadelphia-area manufacturing activity.

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