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Bonds mostly flat; market ignores weather-clouded data

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U.S. Treasury bonds were little changed on Wednesday as weather-clouded data sidelined investors and tensions in Ukraine calmed.

Yields held steady after a rally on Monday and a sell-off on Tuesday as the European Union offered $15 billion and the United States offered $1 billion in financial support to Ukraine, which has been embroiled in a conflict with Russia.

"The market is trying to recover from the sell-off of yesterday. There has been a lot of volatility without much change," said James Sarni, a managing principal at Payden & Rygel in Los Angeles.

In its Beige Book report the Federal Reserve confirmed that severe winter weather had marred a slew of U.S. economic data in the past two months.

Investors also attributed lower-than-expected private employment and service sector growth reports on Thursday to bad weather and will wait for fresh data for a better sense of the pace of the U.S. economy.

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"The market is starting to refocus more on the fundamentals and not just trade on risk-off," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.

"We are back to the same story we've had for the past two months, where all the data weakness is mostly because of weather but the underlying pace of the recovery remains steady," said Goldberg.

Earlier in the session, yields recovered after dipping briefly following the release of the employment survey, commonly viewed as a preview of Friday's much anticipated nonfarm payroll data.

Ten-year notes were last up 3/32 in price, pulling yields down to 2.689 percent after Tuesday's close of 2.69 percent. Thirty-year bonds gained 9/32, sending yields to 3.632 percent from Monday's close of 3.637 percent.

Traders see 10-year note yields finding support at 2.75 percent, the 100-day moving average.

The Fed bought $2.54 billion in debt due between 2019 and 2021 as part of its ongoing bond-buying program.

—By Reuters

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