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Treasuries Close Nearly Flat Following Choppy Trading Day

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

Bond prices spent most of the day lingering near the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 1.636 percent.

During the session, the ten-year yield reached a high of 1.653 percent, its highest intraday level in five months.

The choppy trading on the day came as traders seemed reluctant to make significant moves amid a relatively quiet day on the U.S. economic front.

Toward the end of the trading day, the Federal Reserve released its Beige Book, which noted the pace of U.S. economic growth has recently slowed.

The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, attributed the slowdown to supply chain disruptions, labor shortages, and uncertainty around the Delta variant of COVID-19.

The Fed also said employment increased at a modest to moderate rate in recent weeks, as demand for workers was high, but labor growth was dampened by a low supply of workers.

On the inflation front, the Beige Book said most districts reported significantly elevated prices, fueled by rising demand for goods and raw materials.

Reports of input cost increases were widespread across industry sectors, driven by product scarcity resulting from supply chain bottlenecks, the Fed said.

Looking ahead, the report said outlooks for near-term economic activity remained positive, but some districts noted increased uncertainty and more cautious optimism than in previous months.

The Beige Book is typically released about two weeks before the Fed's next monetary policy meeting, which is scheduled for November 2nd and 3rd.

The Fed has recently indicated it could announce plans to begin scaling back its asset purchases following the meeting.

Meanwhile, the Treasury Department announced the results of this month's auction of $24 billion worth of twenty-year bonds, which attracted below average demand.

The twenty-year bond auction drew a high yield of 2.100 percent and a bid-to-cover ratio of 2.25, while the ten previous twenty-year bond auctions had an average bid-to-cover ratio of 2.35.

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

Trading on Thursday may be impacted by reaction to reports on weekly jobless claims, existing home sales and leading economic indicators.

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