Treasuries See Further Upside Following Ten-Year Note Auction

After ending the previous session sharply higher, treasuries saw further upside over the course of the trading day on Wednesday.

Bond prices showed a lack of direction early in the session but managed to finish the day firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 4.8 basis points to 4.523 percent.

With the continued decrease on the day, the ten-year yield ended the session at its lowest closing level in well over a month.

Treasuries reached new highs for the session after the Treasury Department revealed this month’s auction of $40 billion worth of ten-year notes attracted average demand.

The ten-year note auction drew a high yield of 4.519 percent and a bid-to-cover ratio of 2.45, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.48.

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

On Tuesday, the Treasury revealed this month’s auction of $48 billion worth of three-year notes attracted modestly below average demand.

The Treasury is due to announce the results of this month’s auction of $24 billion worth of thirty-year bonds on Thursday.

Treasuries continued to benefit from optimism about the outlook for interest rates even though Federal Reserve Chair Jerome Powell refrained from specifically addressing monetary policy during a speech this morning.

Powell is also scheduled to participate in a policy panel discussion before the 24th Jacques Polak Annual Research Conference on Thursday.

The Fed chief’s remarks on Thursday may attract more attention, while traders are also likely to keep an eye on a report on weekly jobless claims.

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