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US Treasurys trade off sessions lows as ECB says market is misjudging Draghi comments

U.S. government debt prices pared losses on Wednesday after the European Central Bank tried to walk back comments made by its president, Mario Draghi.

The yield on the benchmark 10-year Treasury note sat at 2.22 percent, while the yield on the 30-year Treasury bond was up at 2.771 percent. Both yields had traded higher earlier in the session. Bond yields move inversely to prices.

The ECB said it sees the market as misjudging Draghi's remarks from Tuesday, in which he said "the threat of deflation is gone and reflationary forces are at play."

Investors also digested recent comments made by Federal Reserve members and economic data. Mortgage applications fell 6 percent last week. Pending home sales fell for the third straight month in May.

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US 1-YR
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US 2-YR
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US 10-YR
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In the central bank sphere, investors are likely to be digesting the comments made by Federal Reserve Chair Janet Yellen on Tuesday, when she told an audience in London that she did not expect to see another financial crisis during her lifetime, giving credit to the reforms seen in the banking system since late 2000s crash.

Meanwhile, San Francisco Fed President John Williams spoke in Canberra, Australia on Wednesday, about the causes and consequences of the global growth slump.

The Treasury Department auctioned $28 billion in seven-year notes at a high yield of 2.056 percent. The bid-to-cover ratio, an indicator of demand, was 2.46, below a recent average of 2.53.

Indirect bidders, which include major central banks, were awarded 65.4 percent, just below a recent average of 67 percent. Direct bidders, which includes domestic money managers, bought 9.4 percent, below a recent average of 12 percent.

The seven-year yield traded higher at 2.049 percent following the sale.

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The move higher comes as investors are looking to Washington, after Senate Republicans announced on Tuesday that they would delay a vote on the Obamacare replacement bill until after July 4.

—Reuters contributed to this report.

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