Following the retreat seen in the previous session, U.S. Treasuries exhibited little clear direction through much of Wednesday's trading.
Bond prices oscillated near the unchanged mark for most of the day before closing slightly higher. Consequently, the yield on the benchmark ten-year note, which inversely correlates with its price, dipped by 2.0 basis points to 4.280 percent.
The indecisive trading for much of the session stemmed from traders' hesitancy to make significant moves ahead of the anticipated release of key consumer price inflation data on Thursday.
Economists predict that the annual rate of consumer price growth will slow to 3.1 percent in June from 3.3 percent in May, while the annual rate of core consumer price growth is expected to remain steady at 3.4 percent.
During congressional testimony, Federal Reserve Chair Jerome Powell indicated that positive economic data would increase the central bank's confidence that inflation is sustainably trending toward its 2 percent target, potentially leading to an interest rate cut.
Powell also cautioned that maintaining elevated interest rates for an extended period could jeopardize economic growth.
"In light of the progress made in lowering inflation and cooling the labor market over the past two years, elevated inflation is not the only risk we face," he remarked. "Reducing policy restraint too late or inadequately could excessively weaken economic activity and employment."
The slight uptick in bond prices may have been bolstered by the favorable reaction to the Treasury Department's auction of $39 billion in ten-year notes, which garnered slightly above-average demand.
The auction yielded a high rate of 4.276 percent and a bid-to-cover ratio of 2.58, compared to the previous ten ten-year note auctions which had an average bid-to-cover ratio of 2.51.
The bid-to-cover ratio is an indicator of demand, representing the amount of bids for each dollar's worth of securities being offered.
Thursday's trading is poised to be influenced by the market's reaction to the Labor Department's report on consumer price inflation and its implications for future interest rate decisions.
