Treasuries Close Nearly Flat Following Volatile Trading Session

(RTTNews) - Treasuries showed considerable volatility over the course of the trading day on Wednesday before ending the session roughly flat.

After seeing initial strength, bond prices came under pressure in morning trading before climbing back near the unchanged line in the afternoon.

Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 1.895 percent.

The nearly flat close by treasuries came on the heels of the release of the minutes of the Federal Reserve's March meeting, which indicated that officials are divided over when to begin raising interest rates.

The minutes showed that several participants determined that the economic data and outlook were likely to warrant beginning the process of raising rates in June.

However, others said conditions would not be appropriate to begin raising rates until later in the year due to the effects lower energy prices and the dollar's appreciation have on inflation.

The Fed noted that a couple of participants suggested that the economic outlook likely would not call for liftoff until 2016.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The labor market data will play the key role in determining the exact liftoff date."

"If we are right and employment growth rebounds in April and May, then a June rate hike might not be out of the question," he added. "Beyond that, we suspect that the pace of rate hikes will depend a lot on the reaction in financial markets."

Meanwhile, traders were also reacting to the Treasury Department's auction of $21 billion worth of ten-year notes, which attracted slightly below average demand.

The ten-year note auction drew a high yield of 1.925 percent and a bid-to-cover ratio of 2.62, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.69.

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

Following several quiet days on the U.S. economic front, trading on Thursday may be impacted by reaction to reports on weekly jobless claims and wholesale inventories.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of $13 billion worth of thirty-year bonds.