Treasuries Fluctuate Before Closing Modestly Lower

Following the rebound seen in the previous session, treasuries fluctuated over the course of the trading day on Wednesday.

Bond prices bounced back and forth across the unchanged line before closing in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose 2.1 basis points to 3.719 percent.

The choppy trading on the day came as traders kept an eye on debt ceiling negotiations amid reports suggesting a lack of progress towards a deal.

House Speaker Kevin McCarthy, R-Calif., told reporters the two sides remain "far apart," with ongoing talks hitting a tag over Republicans' demand for spending cuts.

Traders were also digesting the minutes of the Federal Reserve's May monetary policy meeting, which indicated uncertainty about the outlook for interest rates.

The minutes revealed participants generally agreed that in light of the lagged effects of cumulative tightening in monetary policy and the potential effects on the economy of a further tightening in credit conditions, the extent to which additional rate hikes may be appropriate had become "less certain."

Some participants felt additional rate increases would likely to be warranted at future meetings due to expectations that progress in returning inflation to 2 percent could continue to be unacceptably slow.

Meanwhile, several others noted that if the economy evolved along the lines of their current outlooks, then further rate hikes may not be necessary.

"In light of the prominent risks to the Committee's objectives with respect to both maximum employment and price stability, participants generally noted the importance of closely monitoring incoming information and its implications for the economic outlook," the Fed said.

Developments regarding the debt ceiling negotiations are likely to in focus on Thursday, while traders are also likely to keep an eye on reports on weekly jobless claims, pending home sales and first quarter GDP.

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