Treasuries Close Nearly Flat After Ten-Year Note Auction

(RTTNews) - After moving modestly higher in early trading on Wednesday, treasuries pulled back near the unchanged line following the Treasury Department's auction of ten-year notes.

Bond prices moved roughly sideways going into the close, ending the session nearly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its prices, edged up by less than a basis point to 2.64 percent.

While the ten-year yield moved only slightly higher on the day, it still extended a recent upward trend and reached its highest closing level in a month.

The early strength among treasuries was partly due to news that the World Bank lowered its global economic growth forecast for 2014.

Citing poor weather in the U.S., financial market turbulence and the Ukrainian crisis, the World Bank said it now expects the global economy to grow by 2.8 percent in 2014 compared to its previous forecast for 3.2 percent growth.

However, treasuries pulled back near the unchanged line following the release of the results of the Treasury's auction of $21 billion worth of ten-year notes.

The ten-year note auction drew a high yield of 2.648 percent, a full basis point higher than the market at the bidding deadline.

Meanwhile, the auction had a bid-to-cover ratio of 2.88 compared to the average bid-to-cover ratio of 2.67 over the ten previous ten-year note auctions.

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

Peter Boockvar, managing director at the Lindsey Group, said, "Bottom line, after touching 2.44% just two weeks ago, the backup to 2.64% wasn't enough to matter in bringing a stronger response to the auction."

"For all the talk of pension fund buying and 'we're running out of bonds to buy' talk, it wasn't reflected much today," he added.

Following several quiet days, the economic calendar picks up on Thursday with the release of reports on weekly jobless claims, retail sales, import and export prices, and business inventories.

The Treasury is also due to sell $13 billion worth of thirty-year bonds, finishing off this week's series of long-term securities auctions.