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2020.02.2619:27:00UTC+00Treasuries Recover From Early Pullback To Close Modestly Higher

After moving to the downside early in the session, treasuries showed a significant turnaround over the course of the trading day on Wednesday.

Bond prices climbed well off their lows of the day and into positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2 basis points to 1.310 percent after reaching a high of 1.381 percent.

With the downturn seen over the course of the session, the ten-year yield fell for the fifth straight day to another new record closing low.

Profit taking contributed to the initial weakness among treasuries, as some traders looked to cash in the strong upward move seen in recent sessions.

Selling pressure waned shortly after the start of trading, however, as lingering worries about the coronavirus outbreak made traders reluctant to leave the relative safety of bonds.

Treasuries subsequently turned higher as the day progressed amid worries about the economic impact of the outbreak escalating into a pandemic.

Meanwhile, traders largely shrugged off a Commerce Department report showing new home sales jumped to their highest level in over twelve years in the month of January.

The report said new home sales spiked by 7.9 percent to an annual rate of 764,000 in January after jumping by 2.3 percent to an upwardly revised rate of 708,000 in December.

Economists had expected new home sales to surge up by 2.3 percent to an annual rate of 710,000 from the 694,000 originally reported for the previous month.

With the much bigger than expected increase, new home sales reached their highest annual rate since hitting 778,000 in July of 2007.

Traders also did not pay much attention to the release of the results of the Treasury Department's auction of $41 billion worth of five-year notes, which attracted above average demand.

The five-year note auction drew a high yield of 1.150 percent and a bid-to-cover ratio of 2.46, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.40.

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

On Thursday, the Treasury is due to announce the results of this month's auction of $32 billion worth of seven-year notes.

A slew of U.S. economic data is also scheduled to be released on Thursday, including reports on weekly jobless claims, durable goods orders and pending home sales.

However, the data is likely to be overshadowed by any developments on the coronavirus front, with President Donald Trump scheduled to hold a press conference on the situation later this evening.

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