Treasuries Close Nearly Flat Following Lackluster Session

(RTTNews) - After moving notably higher in the previous session, treasuries showed a lack of direction over the course of the trading day on Wednesday.

Bond prices spent the day bouncing back and forth across the unchanged line before closing nearly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.653 percent.

The roughly flat close by treasuries came after the minutes from the Federal Reserve's latest monetary policy meeting indicated the central bank is unlikely to change its ultra-loose monetary policy anytime soon.

Participants in the March meeting acknowledged the improvement in the medium-term outlook for real GDP growth and employment but continued to see the uncertainty surrounding that outlook as elevated.

With measures of the economy still below pre-pandemic levels, the Fed reiterated that it would likely be "some time" before the central bank considers changing its monetary policy stance.

The minutes said members expect to maintain an accommodative stance of monetary policy until the Fed's goals of maximum employment and inflation moderately above 2 percent for some time are achieved.

The Fed's views were largely unchanged from previous months, with the minutes noting outcome-based guidance did not need to be recalibrated often in response to incoming data or the evolving outlook

"In particular, various participants noted that changes in the path of policy should be based primarily on observed outcomes rather than forecasts," the Fed said.

The minutes also highlighted the recent increase in longer-term Treasury yields, which was attributed to increased investor optimism about the economic outlook and expectations of higher Treasury debt issuance.

The Fed noted market depth became thin and bid-ask spreads widened amid an especially sharp increase in yields on February 25 but said Treasury market liquidity gradually recovered over the following days.

In U.S. economic news, the Commerce Department released a report showing the U.S. trade deficit widened more than expected in the month of February.

The Commerce Department said the trade deficit widened to $71.1 billion in February from a revised $67.8 billion in January.

Economists had expected the deficit to widen to $70.5 billion from the $68.2 billion originally reported for the previous month.

With the bigger than expected increase in February, the size of the U.S. trade deficit reached a new record high.

A report on weekly jobless claims is likely to attract attention on Thursday, while traders are also likely to keep an eye on remarks by Fed Chair Jerome Powell during a virtual International Monetary Fund Debate on the Global Economy.