Treasuries Rebound From Lows To Close Nearly Flat

(RTTNews) - After moving lower for much of the trading day on Wednesday, treasuries rebounded following the release of the minutes of the latest Federal Reserve meeting before ending the day roughly flat.

Bond prices jumped well off their worst levels but were unable to break convincingly into positive territory. Subsequently, the yield on the benchmark ten-year notes, which moves opposite of its price, inched up by less than a basis point to 2.684 percent after hitting a high of 2.723 percent.

The late-day recovery by treasuries came as the minutes of the March Fed meeting eased concerns about the central bank raising interest rates sooner than anticipated.

The minutes said some meeting participants expressed concern that the increase in the median projection for the federal funds rate could be misconstrued as indicating a move to a less accommodative reaction function.

Several participants noted that the increase in the median projection for the federal funds rate overstated the shift in the projections.

Meanwhile, a number of participants said an upward shift was arguably warranted by the improvement in the outlook for the labor market.

Peter Boockvar, managing director at the Lindsey Group, said, "Some just don't want to give up easy money while others are saying in essence that after all these years, it is time."

"It's also a battle of semantics that market participants should watch but not pay much attention to right now because it's not a factor until 2015 and we still have $660 billion of QE at an annualized run rate to unwind," he added.

Earlier in the day, profit taking contributed to weakness among treasuries along with a negative reaction to the Treasury Department's auction of $21 billion worth of ten-year notes.

The ten-year note auction drew a high yield of 2.72 percent and a bid-to-cover ratio of 2.76, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.64.

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

The Treasury is due to sell $13 billion worth of thirty-year bonds on Thursday, finishing off this week's series of long-term securities auctions.

Following several quiet days on the U.S. economic front, trading on Thursday could also be impacted by the release of reports on weekly jobless claims and import and export prices.