US Treasury debt prices were near steady on Wednesday as the latest round of Federal Reserve buying disappointed traders, who were now awaiting the release of minutes from the central bank's last meeting. Given the optimism in financial markets about the prospects for an economic recovery, investors would be much attuned to any shifts in the Fed's language that might signal that it, too, is becoming more sanguine.
In the meantime, benchmark 10-year notes were flat and yielding 3.25 percent. They have risen more than 0.75 percentage point - the equivalent of three interest rate hikes by the Fed in its customary quarter point increments - since policy-makers first unveiled their emergency plan to buy Treasuries back in March. The minutes from the April policy-setting meeting, due to be released at 2 pm (1800 GMT), will contain Fed staffers' "central tendency" forecasts.
If any of the numbers were revised up, it would send a strong signal of growing faith in the recovery from policy officials, and likely hurt Treasuries. With equity markets around the world putting in a strong showing over the past two months, the Fed's presence in the markets is a major factor preventing bond yields from rising even more sharply than they already have.
That seemed to be the case on Wednesday, with bonds holding their ground despite a 1.2 percent rise in the S&P 500. Still, the latest round of buying, which focused on 7- and 10-year notes, was less than some traders expected. The Fed bought $7.699 billion, less than the $8.5 billion seen in the last transaction focusing on similar maturities.
At the short-end of the yield curve, two-year note yields, which have been stuck in a tight range for about eight weeks, inched down to 0.87 percent. With longer-term yields climbing, the gap between 10- and two-year yields was near its widest since November.