Treasuries saw substantial weakness over the course of the trading session on Wednesday, extending a recent downward move. Weak demand for an auction of five-year notes generated some selling pressure in afternoon trading.

The benchmark ten-year note moved well off its worst level of the day going into the close, although it remained firmly negative. Subsequently, the yield on the ten-year note closed up 11.8 basis points at 2.772 percent.

After seeing some initial weakness, treasuries lingered in the red for much of the session before accelerating to the downside following the release of the results of the Treasury Department's auction of $34 billion worth of five-year notes.

The auction drew a higher than expected yield of 1.849 percent and a bid-to-cover ratio of 2.02. The bid-to-cover ratio, an indicator of demand, came in well below the 2.21 from the Treasury's previous auction of $32 billion in five-year notes last month.

The weaker than expected demand for the five-year note auction came on the heels of a failed 40-year gilt auction in the U.K. Earlier, the U.K. Debt Management Office said investors bid for 1.63 billion pounds of the 40-year securities compared to the 1.75 billion pounds offered.

Peter Boockvar, equity strategist at Miller Tabak said, Today's failed 40-year U.K. gilt auction obviously highlights the financing risk that heavily indebted, money printing countries face, but the fear is at the longer end of the curve due to longer term inflation concerns.

Today's five-year and to some extent, tomorrow's seven-year won't be subject to the same fears as would a ten-year or thirty-year auction, Boockvar added.

The Treasury Department is due to auction $24 billion worth of seven-year notes on Thursday. The previous auction of $22 billion worth on seven-year notes in February drew a yield of 2.748 percent and a bid-to-cover ratio of 2.11.

While news that the Federal Reserve planned to begin buying long-term treasuries today contributed to a late-day rally on Tuesday, traders largely shrugged off the New York Fed's announcement that it purchased $7.5 billion in treasury securities.

Last Wednesday, the Fed revealed that it decided to buy up to $300 billion of longer-term treasury securities over the next six months.

Traders are likely to be focused on the release of the results of the seven-year note auction on Thursday, although the Labor Department's report on weekly initial jobless claims may also attract some attention.

The Commerce Department is also due to release its final report on fourth quarter gross domestic product, with economists expecting the pace of contraction in GDP to be revised to 6.6 percent from 6.2 percent.

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