NEW YORK: US Treasuries were steady on Wednesday as investors took profits from the recent rally, before Thursday's highly anticipated European Central Bank meeting.
The ECB is expected to cut interest rates and announce other measures to help stimulate growth in the region.
Bonds have rallied in recent weeks, in part in anticipation of the ECB's actions. Yields have risen back from 11-month lows reached last week, however, as investors take profits.
"A lot of the ECB has been priced in and you see some profit taking ahead of them," said Sean Murphy, a Treasuries trader at Societe Generale in New York.
The ECB meeting also comes before Friday's employment report for May, which could mark a volatile two days of trading.
Benchmark 10-year note yields are pushing against technical support at the 2.60 percent level, up from 2.40 percent last week.
Disappointment at the ECB's announcement on Thursday or a strong than expected jobs figure on Friday could push 10-year note yields back into the range of 2.60 percent to 2.80 percent, where they had traded from late January through May.
"Everyone's focused on the ECB and they do have a history of underwhelming the market when it comes to actually delivering changes on monetary policy," said Ian Lyngen, a senior government bond strategist at CRT Capital in Stamford, Connecticut.
Treasuries also erased earlier price gains on Wednesday after strong US services sector data overcame weaker than expected private sector jobs gains to show solid economic growth.
Growth in the US services sector accelerated in May, rising at the fastest pace in nine months as new orders and business activity jumped.
The data came after a report by a payrolls processor showed that US companies hired 179,000 workers in May, marking the lowest monthly increase since January and falling short of market expectations.
The US trade deficit also widened to its highest level in two years in April as imports hit a record high, suggesting trade could be a drag on second-quarter growth.
The Federal Reserve bought $1.03 billion in bonds due from 2039 to 2043 on Wednesday as part of its ongoing purchase program.
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