Treasuries Close Modestly Higher After Recovering From Early Weakness

(RTTNews) - After initially coming under pressure, treasuries showed a notable turnaround over the course of the trading day on Wednesday before closing modestly higher.

Bond prices pulled back off their best levels in afternoon trading but managed to close in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.5 basis points to 2.223 percent.

The ten-year yield closed lower for the first time in seven sessions, pulling back off the ten-month closing high set on Tuesday.

Treasuries likely benefited from bargain hunting following the sell-off seen in reaction to President-elect Donald Trump's surprise victory, which inspired concerns about increased inflation pressures

Traders were also reacting to a batch of economic data showing that conditions largely held steady ahead of last week's elections.

The Labor Department said its producer price index for final demand was unchanged in October after rising by 0.3 percent in September. Economists had expected another 0.3 percent increase.

Meanwhile, the report said core producer prices, which exclude food and energy prices, dipped by 0.2 percent in October after edging up by 0.2 percent in September. Core prices had been expected to rise by 0.2 percent.

A separate report from the Federal Reserve said industrial production was unchanged in October, with a steep drop in utilities output offsetting a jump in mining.

The Fed said industrial production came in flat in October after dropping by a revised 0.2 percent in September. Economists had expected production to match the 0.1 percent uptick originally reported for the previous month.

Additionally, the National Association of Home Builders said homebuilder confidence held steady in November, with most members responding before the elections.

Another batch of economic data may be in focus on Thursday, with traders likely to keep an eye on reports on consumer prices, housing starts, and weekly jobless claims.

Trading could also be impacted by reaction to remarks by Fed Chair Janet Yellen, who is due to testify about the economic outlook before Congress's Joint Economic Committee.