MW: Treasurys pare losses after U.K. formally begins Brexit process
Treasury prices gained some ground on Wednesday after U.K. Prime Minister Theresa May began the Article 50 process, which formally begins the process of taking the country out of the European Union.
The yield on the 10-year Treasury note TMUBMUSD10Y, -1.15% slipped 2.6 basis points to 2.398%. The yield on the 30-year Treasury bond TMUBMUSD02Y, -2.42% fell 2.3 basis points to 3.006%. The yield on the 2-year Treasury note TMUBMUSD30Y, -0.67% fell 2 basis points to 1.286%.
Bond prices move inversely with yields and one basis point is equal to a hundredth of a percentage point.
â€śThe 10-year note yield has backed off from levels that suggest a breakout above the 2.60% is not likely to happen anytime soon.â€ť wrote Peter Cardillo, chief market economist for First Standard Financial, in a note, predicting Treasury yields were unlikely to follow through on the rise seen Tuesday.
â€śIn fact, with the formal request by Great Britain to exit the EU this week, coupled with the upcoming French elections, yields may be poised to hang around the present levels,â€ť he said.
See: Brexit: Hereâ€™s what happens now that the U.K. has triggered Article 50
On Tuesday, positive economic data took yields up as better-than-expected readings from the consumer confidence index heightened demand for risky assets and sapped demand for safe government paper. But after Theresa May ended months of anticipation on when the U.K. would begin the process to leave the EU, investors flocked back to haven assets as one source of geopolitical uncertainty in Europe is now concluded.
Opinion: Three ways todayâ€™s triggering of Brexit will change Britain and Europe
Chicago Federal Reserve President Charles Evans, who is a voting member of the central bankâ€™s interest-rate-setting committee, said he expects â€śone or twoâ€ť more interest rate increases this year. Evans added an inflation rate of 2.5 % â€śfor a timeâ€ť would not be out of keeping with the Fedâ€™s plans. His remarks appeared to break the fall of Treasury prices.
San Francisco Fed President John Williams and Boston Fed President Eric Rosengren are also expected to speak on Wednesday.
Traders said they were looking ahead to an auction of $28 Billion worth of 7-year notes at 1 p.m.