After coming under pressure in early trading, treasuries showed a significant recovery over the course of the trading day on Wednesday.
Bond prices bounced well off their lows for the session to end the day modestly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.3 basis points to 2.181 percent after reaching a high of 2.254 percent.
The rebound by treasuries coincided with a pullback by stocks on Wall Street, with the Dow tumbling firmly into negative territory after rising more than 170 points in early trading.
Stocks initially moved higher along with the overseas markets, but buying interest waned not long after the open amid a lack of U.S. economic data.
Treasuries also benefited from a positive reaction to the results of the Treasury Department’s auction of $21 billion worth of ten-year notes, which attracted slightly above average demand.
The ten-year note auction drew a high yield of 2.235 percent and a bid-to-cover ratio of 2.70, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.66.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Finishing off this week’s series of long-term securities auctions, the Treasury is due to sell $13 billion worth of thirty-year bonds on Thursday.
Trading on Thursday could also be impacted by reaction to reports on weekly jobless claims, import and export prices, and wholesale inventories.
The material has been provided by InstaForex Company – www.instaforex.com