After seeing initial weakness, treasuries turned to the upside over the course of the trading day on Tuesday to end the session modestly higher.
Bond prices turned higher in morning trading and hovered in positive territory for the remainder of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.1 basis points to 2.035 percent.
The higher close by treasuries came amid weakness on Wall Street, with stocks giving back ground following the rally seen over the two previous sessions.
Traders were also reacting to a report from the Commerce Department showing that the U.S. trade deficit widened significantly in the month of August.
The Commerce Department said the trade deficit widened to $48.3 billion in August from a revised $41.8 billion in July. The deficit had been expected to widen to $48.0 billion.
The wider trade deficit came as the value of imports climbed 1.2 percent to $233.4 billion, but the value of exports fell 2 percent to $185.1 billion.
Meanwhile, traders largely shrugged off the results of the Treasury Department’s auction of $24 billion worth of three-year notes, which attracted below average demand.
The three-year note auction drew a high yield of 0.895 percent and a bid-to-cover ratio of 3.14, while the ten previous three-year note auctions had an average bid-to-cover ratio of 3.29.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Trading on Wednesday may be somewhat subdued amid a lack of major U.S. economic data, although traders are likely to keep an eye on the results of the Treasury’s auction of $21 billion worth of ten-year notes.
The material has been provided by InstaForex Company – www.instaforex.com