Treasuries were locked in a narrow range trade Wednesday, unaffected by neither the Treasury's $27 billion 2-year note sale nor the Fed's Beige Book. A lack of data, scant market moving events, and a quiet stock market left Treasuries without inspiration or direction.
Hence, prices closed unchanged on the day. Despite the advent of the note auction, the middle of the curve generally underperformed, but the 3% and and 4% yields on the 5-year and 10-year repelled the uptick in yields.
Meanwhile, only a marginal concession was built into the 2-year note auction and the market edged slightly lower on expectations of an uninspiring sale, especially with the approach of next week's refunding onslaught. Results were a little better than expected, however, with a 2.16 bid cover, and that helped the front end edge into positive territory late in the day.
The Fed's Beige book also aided the friendly tone as the report continued to characterize the economy's performance as lackluster. Ongoing talk the Fed might by longer dated securities as a method of easing policy also kept bond bears at bay, as did the $1.34 drop in oil prices.
After the close Greenspan said he would accept a renomination as Fed Chairman.