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Treasuries Extend Yesterday's Notable Pullback

Treasuries showed a notable move to the downside during trading on Wednesday, extending the pullback seen in the previous session.

Bond prices came under pressure in morning trading and remained firmly negative throughout the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, advanced 8.7 basis points to 2.931 percent.

The continued weakness among treasuries came after the Institute for Supply Management released a report showing U.S. manufacturing activity unexpectedly expanded at a slightly faster rate in the month of May.

The ISM said its manufacturing PMI inched up to 56.1 in May from 55.4 in April, with a reading above 50 indicating growth in the sector. The uptick surprised economists, who had expected the index to dip to 54.5.

Meanwhile, the Commerce Department released a separate report showing construction spending in the U.S. increased by less than expected in the month of April.

The report showed construction spending edged up by 0.2 percent to an annual rate of $1.745 trillion in April after rising by 0.3 percent to a revised rate of $1.741 trillion in March.

Economist had expected construction spending to climb by 0.5 percent compared to the 0.1 percent uptick originally reported for the previous month.

Later in the trading day, the Federal Reserve's Beige Book said a majority of the twelve Fed districts have recently experienced slight or modest economic growth.

The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, said four districts explicitly noted that the pace of growth had slowed since the prior period.

Reports on private sector employment, initial jobless claims and factory orders may attract attention on Thursday, although trading activity may be somewhat subdued ahead of the monthly jobs report on Friday.

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