Treasuries Show Significant Move To The Downside

After ending the previous session roughly flat, treasuries showed a notable move to the downside during trading on Tuesday.

Bond prices came under pressure in morning trading and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed by 6.6 basis points to 2.546 percent.

With the significant increase during the session, the ten-year yield reached its highest closing level in nearly ten months.

The weakness among treasuries came as stocks on Wall Street rose to new record highs amid ongoing optimism about the economic outlook.

Treasuries remained stuck in the red following the release of the results of the Treasury Department’s auction of $24 billion worth of three-year notes, which attracted above average demand.

The three-year note auction drew a high yield of 2.080 percent and a bid-to-cover ratio of 3.13, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.86.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Reports on import and export prices and wholesale inventories may attract attention on Wednesday, although traders may look ahead to more closely watched reports on retail sales and producer and consumer prices due later in the week.

Bond traders are likely to keep an eye on the results of the Treasury Department’s auction of $20 billion worth of ten-year notes.

The material has been provided by InstaForex Company – www.instaforex.com