Treasuries Regain Ground After Trending Lower In Recent Sessions

After trending lower over the past few sessions, treasuries moved back to the upside over the course of the trading day on Wednesday.

Bond prices moved steadily higher for much of the session before closing firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3 basis points to 1.604 percent.

The rebound by treasuries may partly have reflected bargain hunting, with the ten-year yield moving lower for the first time in five sessions.

Treasuries also moved higher after the Commerce Department released a report showing an unexpected decrease in new residential construction in the month of October.

The report showed housing starts slid by 0.7 percent to an annual rate of 1.520 million in October after tumbling by 2.7 percent to a revised rate of 1.530 million in September.

The continued decline came as a surprise to economists, who had expected housing starts to jump by 1.6 percent to an annual rate of 1.580 million from the 1.555 million originally reported for the previous month.

Meanwhile, the Commerce Department said building permits surged up by 4.0 percent to an annual rate of 1.650 million in October after plummeting by 7.8 percent to a revised rate of 1.586 million in September.

Bond prices remained positive after the Treasury Department revealed this month’s auction of $23 billion worth of twenty-year bonds attracted average demand.

The twenty-year bond auction drew a high yield of 2.065 percent and a bid-to-cover ratio of 2.34, while the ten previous twenty-year bond auctions had an average bid-to-cover ratio of 2.34.

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 Thursday, the Treasury is due to announce the details of this month’s auctions of two-year, five-year and seven-year notes.

Trading on Thursday may also be impacted by reaction to reports on weekly jobless claims, Philadelphia-area manufacturing activity and leading economic indicators.

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