US Treasury yields slip after release of Fed minutes

U.S. government debt prices rose on Wednesday after the release of the minutes from the Federal Open Market Committee's (FOMC) meeting in May.

The benchmark 10-year note yield slipped to trade at 2.255 percent, while the short-term two-year yield dipped to 1.273 percent. Both yields traded higher heading into the release.

The minutes showed Fed officials were in sync on how to unwind its massive $4.5 trillion balance sheet. The central bank sees a system where it will announce cap limits on how much it will allow to roll off each month without reinvesting, the minutes showed. Any amount it receives in repayments that exceeds the cap limit will be reinvested.

"There was a bit for bulls and bears here," said Ninh Chung, head of investment strategy and portfolio management at Silicon Valley Bank. "The announcement of the balance-sheet plan gives the Fed options without scaring the market too much."

In other economic news, total mortgage application volume increased 4.4 percent last week on a seasonally adjusted basis from the previous week thanks largely to refinancings. Existing home sales slipped 2.3 percent in April, more than expected.


Investors also digested fresh supply into the market.

The Treasury Department auctioned $34 billion in five-year notes at a high yield of 1.831 percent, the highest yield since November. The bid-to-cover ratio, an indicator of demand, was 2.67, the highest since December.

Indirect bidders, which include major central banks, were awarded 68.7 percent, the smallest since May 2016. Direct bidders, which includes domestic money managers, bought 8.6 percent, the largest since May 2016.

Meanwhile, investors will remain on alert for any news out of the U.S. president's first foreign trip. On Wednesday, President Donald Trump met with Pope Francis at the Vatican.

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—CNBC's Fred Imbert contributed to this report.