Treasuries Climb Further Off Recent Lows With Modest Gains

(RTTNews) - Treasuries saw modest strength during trading on Tuesday, continuing to recover from the sell-off that was seen last Friday.

Bond prices moved moderately higher in early trading and managed to remain in positive territory for much of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 1.5 basis points to 2.63 percent.

With the drop, the ten-year yield added to the 7 basis point loss posted on Monday, pulling back further off Friday's nearly two-year closing high.

The modest strength among treasuries came as traders continued to pick up bonds at reduced levels following the jobs report-inspired sell-off.

Buying interest remained relatively subdued, however, with a lack of major U.S. economic data keeping some traders on the sidelines.

Traders largely shrugged off the results of the Treasury Department's auction of $32 billion worth of three-year notes, which attracted below average demand.

The three-year note auction drew a high yield of 0.719 percent and a bid-to-cover ratio of 3.35, while the ten previous three-year note auctions had an average bid-to-cover ratio of 3.50.

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

Trading on Wednesday may be impacted by the release of the minutes of the latest Federal Reserve meeting, which could shed some additional light on the outlook for the central bank's stimulus program.

Bond traders are also likely to keep an eye on the results of the Treasury's auction of $21 billion worth of ten-year notes.