Treasury yields erase losses amid oil reversal

US 10-YR
US 30-YR

U.S. bond prices were flat Wednesday, erasing gains, as oil and stock prices reversed course after early losses.

The yield (which has an inverse relationship to the price) on the benchmark 10-year Treasury note was nearly unchanged at 1.722 percent. It briefly dipped below 1.65 percent earlier in the day amid an oil and stock skid. The yield on the 30-year Treasury bond, meanwhile, was also about flat at 2.577 percent.

The Treasury on Wednesday auctioned $34 billion in five-year notes at a high yield of 1.169 percent, the lowest yield on the note since May 2013, according to Reuters. The bid-to-cover ratio, an indicator of demand, was 2.44, versus a recent average of 2.46.

Indirect bidders, which include major central banks, were awarded 67.3 percent, the biggest portion since July. Direct bidders, which include domestic money managers, bought 10 percent.

Oil prices continue to contribute to volatility in both debt and equity markets. Hopes of an oil production cut were dashed on Tuesday after Saudi Arabia's oil minister Ali bin Ibrahim Al-Naimi signaled no cuts would happen to tackle the global supply glut. These concerns led to oil falling lower and equities dropping, and it gave a boost to U.S. Treasury markets, which are seen as a safe haven asset.

However, after initially sliding, oil prices traded higher on Wednesday. Major U.S. stock averages, meanwhile, were mixed and well off their lows of the day. Treasury yields ticked higher amid the reversal.

On the data front, the February Markit Flash Services PMI came in at 49.8, well below expectations. New home sales for January hit 494,000, below the expected 520,000.

Investors will also be watching for more hints on future policy at the U.S. Federal Reserve and whether it will continue its tightening process this year. St. Louis Fed President James Bullard is due to speak after the closing bell at 7.00 p.m. ET.

Fed Vice Chairman Stanley Fischer said Tuesday that Fed officials "simply do not know" what course of action they will take at their next meeting three weeks from now, adding that it is too early to assess the impact of current market volatility.