Treasuries Close Higher After Disappointing Housing Data

(RTTNews) - Extending the upward trend seen over the past few sessions, treasuries moved modestly higher during trading on Monday.

Bond prices moved to the upside in morning trading before giving back some ground going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.6 basis points to 1.589 percent.

Treasuries may have benefited from a report from the Commerce Department showing a sharp pullback in U.S. new home sales in the month of August.

The report said new home sales tumbled by 7.6 percent to an annual rate of 609,000 in August after surging up by 13.8 percent to a revised 659,000 in July.

Economists had expected new home sales to drop to a rate of 598,000 from the 654,000 originally reported for the previous month.

The decrease in new home sales came after they reached their highest annual rate in well over eight years in July.

Treasuries saw continued strength even after the results of the Treasury Department's auction of $26 billion worth of two-years notes showed below average demand.

The two-year note auction drew a high yield of 0.750 percent and a bid-to-cover ratio of 2.65, while the ten previous two-year note auctions had an average bid-to-cover ratio of 2.81.

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 Tuesday may be impacted by reaction to tonight's first presidential debate as well as reports on home prices and consumer confidence.

The results of the Treasury Department's auction of $34 billion worth of five-year notes could also impact trading on the day.