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Treasury yields climb as oil prices trade at parity

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U.S. sovereign bond yields rose on Wednesday as oil prices and stocks climbed, and after a host of data releases on the last full trading day of the week.

Personal income rose 0.3 percent in November, while the associated, closely-watched, core PCE deflator rose 1.3 percent. Durable goods orders came in unchanged for November.

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Yield
 
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US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
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US 10-YR
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US 30-YR
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The final University of Michigan consumer sentiment survey for December came in at 92.6, and new home sales for November rose 4.3 percent.

U.S. 10-year Treasury yields climbed Wednesday to trade around 2.2561 percent, after closing at 2.239 percent on Tuesday.

Meanwhile, longer dated 30-year bond yields were up at 2.9893 percent after finishing at 2.964 percent in the previous session. They touched a one-week high of 3.015 percent.

The Treasury Department also sold $13 billion of two-year floating-rate notes on Wednesday to moderate investor demand.

Heading into the final two weeks of the year, limited liquidity is likely to heighten the severity of market moves, particularly during the holiday periods of Christmas and New Year's Eve, when most Western markets will be closed.

Wednesday is the last full trading day of the week, as Thursday is a half day for the Christmas Eve holiday.

"The core PCE inflation data for November will be released today and given that the Federal Open Market Committee (FOMC) is now monitoring 'actual' inflation readings as well as expected inflation means the core PCE inflation data is now top-tier data for the markets. Price action in the rates market certainly suggests that the festive vacation period has begun with liquidity and volatility both on the decline," said European head of global markets research at Bank of Tokyo-Mitsubishi UFJ, Derek Halpenny.

Oil prices remained in focus for traders Wednesday, as U.S. crude prices rose to a premium over internationally traded Brent on Wednesday.

Front-month U.S. West Texas Intermediate (WTI) crude futures were trading at $37.36 per barrel on Wednesday, up $1.22 from their last settlement.

Brent crude earlier traded as low as $36.28 a barrel, flipping WTI from a long-standing discount into a slight premium over the international benchmark for the first time since November 2014, according to Reuters. Both continued to trade around parity throughout the morning session.

Crude inventories fell by 3.6 million barrels last week to 486.7 million, compared with analysts' expectations polled by Reuters for an increase of 1.1 million barrels. Official inventory data will be published later on Wednesday.