Yields little moved as investors position for Fed

NEW YORK: US Treasury yields were little changed on Wednesday as investors looked to square positions ahead of a spate of potentially market-moving events that include two central bank meetings this week and a vote in Britain on whether to leave the European Union next week.

Yields remained near their late Tuesday levels, just above four-month lows, as the market was little moved by stronger-than-expected US producer price index data and a survey from the New York Federal Reserve that showed a pickup in manufacturing activity.

Traders were positioning ahead of the conclusion of the US Federal Reserve's two-day policy meeting at 2 p.m. EDT (1800 GMT) Wednesday and the Bank of Japan's announcement on interest rate policy on Thursday, analysts said, with the big event being Britain's vote next week on whether to leave the EU.

"The big stuff is not PPI or the June NY Fed business outlook, the big issues are later today and then next week and maybe tomorrow," said David Ader, head of government bond strategy at CRT Capital in Stamford, Connecticut. "So we're in a holding pattern."

Benchmark 10-year US Treasury notes fell 1/32 in price to yield 1.616 percent.

Treasury prices, which move in the opposite direction of their yields, rose in each of the past six sessions before Wednesday's modest decline.

"We're a little weaker because we've been up so much and we're waiting," Ader said, "and so there's little selling, but really more than anything it's probably a lack of buying."

German 10-year government bond yields remained in negative territory for a second day, after falling below zero percent yield for the first time on Tuesday.

Deutsche Asset Management Chief Investment Officer Stefan Kreuzkamp said in a note to clients on Wednesday that the negative interest rates on so-called German Bunds showed that markets have been so distorted by central banks that they were no longer representative of the investment environment.

"Ten-year German Bund yields are the measure of all things in finance," Kreuzkamp said in the note. "A minus in front of the interest rate is a symbolic manifestation of a world turning upside down. The evaporation of this reference distorts every single asset class."