Treasuries Move Back To The Upside After Yesterday's Pullback

(RTTNews) - Treasuries moved modestly higher over the course of the trading day on Tuesday, nearly offsetting the pullback seen in the previous session.

While there was not much conviction behind the upward move, bond prices managed to end the day in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 1.6 basis points to 2.595 percent.

The ten-year yield nearly offset the 2 basis point gain seen on Monday, although it remained just above last Friday's three-moth closing low.

Treasuries seemed to benefit from lingering concerns about the crisis in Ukraine amid reports of continued clashes between Ukrainian armed forces and pro-Russian militants.

The latest reports from the region indicated that more than 30 people have been killed as Ukrainian troops attempt to retake an occupied city in the eastern part of the country.

News that the Organization for Economic Cooperation and Development cut its global growth forecast also increased the appeal of bonds.

Additionally, treasuries held on to their gains following the release of the results of the Treasury Department's auction of $29 billion worth of three-year notes, which attracted slightly above average demand.

The three-year note auction drew a high yield of 0.928 percent and a bid-to-cover ratio of 3.40, while the ten previous three-year note auctions had an average bid-to-cover ratio of 3.32.

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

Meanwhile, traders largely shrugged off a report from the Commerce Department showing that the U.S. trade deficit narrowed in the month of March.

The Commerce Department said the trade deficit narrowed to $40.4 billion in March from a revised $41.9 billion in February. Economists had been expecting a deficit of about $40.5 billion.

The narrower deficit came as the value of exports surged up by 2.1 percent, outpacing the 1.1 percent increase in the value of imports.

Trading on Wednesday may be impacted by remarks by Federal Reserve Chair Janet Yellen, who is due to testify before the Joint Economic Committee of Congress.

Bond traders are also likely to keep an eye on a report on labor productivity in the first quarter as well as the results of the Treasury's auction of $24 billion worth of ten-year notes.