Treasuries Close Modestly Lower Following Lackluster Session

(RTTNews) - Treasuries showed a lack of direction throughout much of the trading session on Tuesday before ending the day modestly lower.

Bond prices spent much of the day bouncing back and forth across the unchanged line. The yield on the benchmark ten-year note, which moves opposite of its price, eventually ended the day up by 1.4 basis points at 1.553 percent.

The choppy trading seen throughout much of the session came as traders continued to express uncertainty about the outlook for interest rates ahead of a speech by Federal Reserve Chair Janet Yellen later this week.

On the U.S. economic front, the Commerce Department released a report this morning showing an unexpected jump in new home sales in the month of July.

The report said new home sales jumped 12.4 percent to an annual rate of 654,000 in July from the revised June rate of 582,000.

The sharp increase in new home sales came as a surprise to economists, who had expected new home sales to drop to a rate of 580,000 from the 592,000 originally reported for the previous month.

With the unexpected increase, new home sales reached their highest annual rate since October of 2007.

The lower close by treasuries came even though the Treasury Department's auction of $26 billion worth of two-year notes attracted above average demand.

The two-year note auction drew a high yield of 0.760 percent and a bid-to-cover ratio of 2.83, while the ten previous two-year note auctions had an average bid-to-cover ratio of 2.60.

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

Looking ahead, the Treasury is due to sell $34 billion worth of five-year notes on Wednesday and $28 billion worth of seven-year notes on Thursday.