Treasuries Close Higher After Recovering From Early Weakness

(RTTNews) - After moving to the downside in early trading, treasuries turned higher over the course of the trading session on Tuesday.

Bond prices rebounded in morning trading and remained in positive territory for the remainder of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.1 basis points to 1.745 percent.

The turnaround by treasuries came amid a sharp pullback by the price of crude oil, which led to weakness on Wall Street.

Crude for April delivery tumbled $1.52 to $31.87 a barrel after surging up $1.64 to $33.39 a barrel in the previous session.

Worries a proposed production freeze will not impact the global supply glut contributed to the pullback by the price of oil.

Treasuries remained positive in afternoon trading even though the Treasury Department's auction of $26 billion worth of two-year notes attracted below average demand.

The two-year note auction drew a high yield of 0.752 percent and a bid-to-cover ratio of 2.91, while the ten previous two-year note auctions had an average bid-to-cover ratio of 3.17.

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 the U.S. economic front, the Conference Board released a report showing that consumer confidence fell by much more than expected in the month of February.

The Conference Board said its consumer confidence index tumbled to 92.2 in February from a revised 97.8 in January. Economists had expected the consumer confidence index to dip to 97.2.

Meanwhile, a separate report from the National Association of Realtors showed an unexpected increase in existing home sales in January.

NAR said existing home sales rose 0.4 percent to a seasonally adjusted annual rate of 5.47 million in January from a downwardly revised 5.45 million in December.

The modest increase came as a surprise to economists, who had expected existing home sales to drop to an annual rate of 5.32 million.

Trading on Wednesday may be impacted by reaction to a report on new home sales as well as the Treasury's auction of $34 billion worth of five-year notes.