After coming under pressure in early trading, treasuries showed a notable turnaround over the course of the trading session on Tuesday.
Bond prices gave back ground in the latter part of the session but managed to close modestly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.4 basis points to 2.26 percent.
In early trading, the ten-year yield jumped as high as 2.335 percent, its highest intraday level in well over five months.
The initial weakness among treasuries was partly in reaction to a continued sell-off in the global bond markets.
Selling pressure subsequently waned, however, leading some traders to go bargain hunting following the recent weakness among treasuries.
However, treasuries pulled back of their highs following the release of the results of the Treasury Department’s auction of $24 billion worth of three-year notes.
The three-year note auction drew a high yield of 1.000 percent and a bid-to-cover ratio of 3.34, while the ten previous three-year note auctions had an average bid-to-cover ratio of 3.27.
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 economic calendar finally picks up on Wednesday, with traders likely to keep a close eye on a report on retail sales in the month of April.
The closely watched retail sales report is likely to overshadow separate reports on import and export prices and business inventories.
Bond trading could also be impacted by the reaction to the Treasury Department’s auction of $24 billion worth of ten-year notes.
The material has been provided by InstaForex Company – www.instaforex.com