After ending the previous session moderately higher, treasuries saw some further upside over the course of the trading day on Tuesday.
Bond prices initially showed a lack of direction but drifted higher as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.8 basis points to 1.994 percent.
The strength among treasuries was partly due to lingering concerns about the outlook for the global economy following another sell-off by Chinese stocks.
Treasuries may also have benefited from trepidation ahead of the Federal Reserve’s monetary policy announcement on Wednesday.
The Fed is widely expected to leave interest rates unchanged, but traders are likely to pay close attention to the wording of the accompanying statement.
Meanwhile, bond traders largely seemed to shrug off the strength seen on Wall Street as well as a notable rebound by the price of crude oil.
Treasuries remained positive following the release of the results of the Treasury Department’s auction of $26 billion worth of two-year notes.
The two-year note auction drew a high yield of 0.860 percent and a bid-to-cover ratio of 2.90, while the ten previous two-year note auctions had an average bid-to-cover ratio of 3.23.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Ahead of the Fed announcement tomorrow afternoon, trading could be impacted by the release of a report on new home sales as well as the Treasury Department’s auction of $35 billion worth of five-year notes.
The material has been provided by InstaForex Company – www.instaforex.com