US Treasury yields erase losses after 10-year notes sale

U.S. government debt prices were slightly lower on Wednesday after a Treasury Department sale that saw soft demand. Investors also digested the abrupt dismissal of FBI Director James Comey.

The Treasury Department auctioned $23 billion in 10-year notes at a high yield of 2.4 percent on Wednesday. The bid-to-cover ratio, an indicator of demand, was 2.33.

Indirect bidders, which include major central banks, were awarded 60.7 percent, the smallest since December. Direct bidders, which includes domestic money managers, bought 5.1 percent.

The yield on the benchmark 10-year Treasury note cut losses after the sale, last trading at 2.414 percent. The yield had traded at 2.392 percent about 10 minutes before the auction results were released.

"The auction was softer than we expected and seasonals were of little help. Overall stats were soft, but not unbelievably so. Again highlights how the auctions are priced by the marginal buyer," Aaron Kohli, interest rates strategist at BMO Capital Markets, said in a note.


On the political front, U.S. President Donald Trump terminated Comey's role at the FBI on Tuesday, saying in a letter that it was "essential that we find new leadership for the FBI that restores public trust and confidence in its vital law enforcement mission."

The U.S. dollar came under pressure shortly after the news, meanwhile, markets in Europe saw slight weakness before ending higher, and Asia Pacific markets ended on a mixed note. U.S. futures also showed signs of a lower open.

In data news, mortgage applications rose 2.4 percent on a seasonally adjusted basis last week. Import prices rose 0.5 percent, more than expected.

In the central bank sphere, more U.S. Federal Reserve members delivered speeches on Wednesday.

Minneapolis Fed President Neel Kashkari said there should not be any relaxation of
regulations that have tightened oversight of Wall Street.

Meanwhile, Boston Fed President Eric Rosengren said the Fed should hike interest rates three
more times this year and at the same time start shedding its bond holdings.

In commodities news, oil prices posted solid gains Wednesday, with U.S. WTI settling 3.16 percent higher at $47.33 per barrel.

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—CNBC's Patti Domm and Reuters contributed to this report.