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Treasuries Continue To Regain Ground Following Recent Weakness

Following the modest rebound seen in the previous session, treasuries saw some further upside during trading on Tuesday.

Bond prices gave back some ground after an early advance but remained firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.5 basis points to 0.829 percent.

With the decrease on the day, the ten-year yield continued to pull back after ending last Friday’s trading at its highest closing level in over two months.

The continued strength among treasuries came as traders looked to the relative safety of bonds as stocks gave back some ground following recent strength.

Traders were also looking ahead to the Federal Reserve’s monetary policy announcement Wednesday afternoon.

The Fed is not expected to announce any significant policy changes, although traders are still likely to pay close attention to the central bank’s assessment of the economic outlook.

Meanwhile, the Treasury Department revealed this month’s auction of $29 billion worth of ten-year notes attracted below average demand.

The ten-year note auction drew a high yield of 0.832 percent and a bid-to-cover ratio of 2.26, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.45.

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

The Fed announcement is likely to be in the spotlight on Wednesday, overshadowing a report on consumer price inflation.

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