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Treasuries Finish Lackluster Session Modestly Higher

Treasuries turned in a relatively lackluster performance during trading on Wednesday but eventually ended the day modestly higher.

Bond prices bounced back and forth across the unchanged line before moving to the upside going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.3 basis points to 0.733 percent.

The uptick by treasuries may partly have reflected their appeal as a safe haven amid rising tensions on the Korean peninsula.

Traders were also reacting to a Commerce Department report showing new residential construction rebounded strongly in May but still came in well below economist estimates.

The report said housing starts jumped by 4.3 percent to an annual rate of 974,000 in May after plummeting by 26.4 percent to a revised rate of 934,000 in April.

Economists had expected housing starts to soar by 22.9 percent to a rate of 1.095 million from the 891,000 originally reported for the previous month.

Meanwhile, the Commerce Department said building permits spiked by 14.4 percent to an annual rate of 1.220 million in May after plunging by 21.4 percent to a revised rate of 1.066 million in April.

Building permits, an indicator of future housing demand, had been expected to surge up by 14.3 percent to a rate of 1.228 million from the 1.074 million originally reported for the previous month.

Treasuries moved to the upside following the release of the results of the Treasury Department's auction of $17 billion worth of twenty-year bonds.

The twenty-year bond auction drew a high yield of 1.314 percent and a bid-to-cover ratio of 2.63.

Last month, the Treasury sold twenty-year bonds for the first time since 1986, drawing a high yield of 1.220 percent and a bid-to-cover ratio of 2.53.

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

The weekly jobless claims report may attract attention on Thursday along with reports on Philadelphia-area manufacturing activity and leading economic indicators.

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