2018.06.2715:17:00UTC+00Treasuries Show Notable Move To The Upside

After ending the previous session roughly flat, treasuries showed a notable move to the upside over the course of the trading day on Wednesday.

Bond prices initially moved higher and climbed more firmly into positive territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.3 basis points to 2.827 percent.

The strength among treasuries came as stocks on Wall Street came under pressure after failing to sustain an early move to the upside.

Stocks initially benefited from news that President Donald Trump's plan to crack down on Chinese investments in the U.S. is less harsh than feared.

Administration officials told reporters Trump wants to strengthen the Committee on Foreign Investment in the U.S. to prevent foreign companies from violating intellectual-property rights of American companies.

Trump expressed support for legislation that would expand CFIUS' authority in a White House statement released Wednesday.

The president said the bill known as the Foreign Investment Risk Review Modernization Act would enhance the administration's ability to protect the U.S. from new and evolving threats posed by foreign investment.

Trump argued the legislation would still sustain the strong, open investment environment to which the country is committed and which benefits the U.S. economy.

Reports earlier this week suggested Trump intended to use the International Emergency Economic Powers Act of 1977 to limit Chinese investment in the U.S.

In U.S. economic news, the Commerce Department released a report showing a smaller than expected decrease in new orders for U.S. manufactured durable goods in the month of May.

The Commerce Department said durable goods orders fell by 0.6 percent in May after tumbling by a revised 1.0 percent in April.

Economists had expected durable goods orders to drop by 1.0 percent compared to the 1.6 percent slump that had been reported for the previous month.

Excluding orders for transportation equipment, durable goods orders dipped by 0.3 percent in May after spiking by 1.9 percent in April. Ex-transportation orders had been expected to rise by 0.5 percent.

Meanwhile, a separate report from the National Association of Realtors showed an unexpected decrease in pending home sales in May.

NAR said its pending home sales index fell by 0.5 percent to 105.9 in May after slumping by 1.3 percent to 106.4 in April. Economists had expected pending home sales to climb by 0.5 percent.

Bond traders also kept an eye on the results of the Treasury Department's auction of $36 billion worth of five-year notes, which attracted slightly above average demand.

The five-year note auction drew a high yield of 2.719 percent and a bid-to-cover ratio of 2.55, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.48.

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 finish off this week's series of long-term securities auctions with the sale of $30 billion worth of seven-year notes on Thursday.

Trading on Thursday may also be impacted by reaction to weekly jobless claims data and the final reading on first quarter GDP.