Treasuries Show Modest Move To The Upside

(RTTNews) - After ending last Friday's trading roughly flat, treasuries moved modestly higher over the course of the trading session on Tuesday.

Bond prices moved to the upside morning trading and remained positive throughout the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.8 basis points to 2.467 percent.

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

The two-year note auction drew a high yield of 1.922 percent and a bid-to-cover ratio of 2.52, while the ten previous two-year note auctions had an average bid-to-cover ratio of 2.86.

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 activity was somewhat subdued, however, with many traders still away from their desks following the long, holiday weekend.

Trading activity may remain light on Wednesday, although reports on consumer confidence and pending home sales may attract some attention.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of $34 billion worth of five-year notes.