Treasuries Move Higher On Strong Ten-Year Note Auction

(RTTNews) - Treasuries moved notably higher over the course of the trading day on Wednesday, climbing further off their recent lows.

Bond prices moved to the upside in early trading and remained firmly positive throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4 basis points to 2.726 percent.

With the drop on the day, the ten-year yield closed lower for the third straight session, pulling back further off the one-month closing high set last Friday.

The early strength among treasuries was partly due to concerns about Chinese economic growth as well as the situation in Ukraine, which increased the appeal of safe havens such as bonds.

Treasuries continued to perform well following the release of the results of the Treasury Department's auction of $21 billion worth of ten-year notes.

The ten-year note auction drew a high yield 2.729 percent and a bid-to-cover ratio of 2.92, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.62.

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, chief market analyst at the Lindsey Group, said, "The strength in the auction basically at the midpoint of the 2.5-3% 10-year yield range that has been carved out over the past 6 months implies the bet that for now that maybe we'll stay on the lower half of that range for the time being."

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

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of $13 billion worth of thirty-year bonds.