NEW YORK: US Treasuries were steady on Wednesday as investors focused on whether the Britain will vote to leave the European Union on Thursday, and before Federal Reserve Chair Janet Yellen was due to testify before lawmakers in Washington for a second day.
British polls show a tight race between the "Remain" and "Leave" camps. Investors have been assuming a lower chance that Britain will leave the EU, after the murder last week of a pro-EU lawmaker was deemed to have derailed the 'Brexit' campaign.
Concerns about possible repercussions if Britain does vote to leave has made many investors reluctant to invest before the outcome is decided, and has overshadowed comments by Yellen during her semi-annual testimony.
"There seems to be quite a lot of reluctance to position strongly one way or another," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.
Yellen struck a relatively dovish tone on Tuesday, stating that global risks and a US hiring slowdown warrant a cautious approach to raising interest rates as the US central bank looks for confirmation that the country's economic recovery remains on track.
That came after the Fed last week cut its economic growth outlook and signaled it still planned to raise rates twice in 2016, though six of its 17 policymakers were projecting just one increase this year.
"She maintained the same tone as she did in her post FOMC remarks, she was certainly dovish leaning," said Goldberg. At the same time, the Fed "is still looking for two hikes this year, which the markets are certainly underpricing," Goldberg said.
Benchmark 10-year notes were last down 3/32 in price to yield 1.71 percent, up from 1.70 percent late Tuesday. Yields fell to an almost four-year low of 1.52 percent last Thursday as fears over a British exit from the EU accelerated.
The Treasury will sell $28 billion in seven-year notes on Wednesday, which comes after a $34 billion sale of five-year notes on Tuesday saw soft demand.
The five-year notes sold at a high yield of 1.218 percent, more than one basis point above where the debt had traded before the auction. Demand was the weakest in nearly seven years.
The government will also sell $13 billion in two-year floating-rate notes on Wednesday and $5 billion in 30-year Treasury Inflation-Protected Securities (TIPS) on Thursday.