Treasuries Close Moderately Higher After Seeing Early Weakness

(RTTNews) - After seeing early weakness, treasuries turned higher over the course of the trading session on Wednesday, extending a recent upward trend.

Bond prices climbed well off their worst levels of the day to close in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.4 basis points to 1.705 percent after reaching a high of 1.769 percent.

With the downturn on the day, the ten-year yield extended the drop seen throughout much of 2016, hitting its lowest closing level in a year.

Treasuries may have benefited from their appeal as a safe haven amid a continued decrease by the price of crude oil.

Crude for March delivery slid $0.49 to $27.45 a barrel after plunging $1.75 to $27.94 a barrel in the previous session.

Crude oil prices initially benefited from an Energy Information Administration report showing an unexpected decrease in crude oil inventories in the week ended February 5th.

However, the price of crude oil pulled back shortly afterward, as the report also showed increases in gasoline distillate fuel inventories as well as record high inventories at a key delivery point in Oklahoma.

Traders also kept an eye on Federal Reserve Chair Janet Yellen's semi-annual monetary policy report to the House Financial Services Committee.

Yellen stressed that monetary policy is not on a preset course and reiterated the oft-repeated statement that the path of the federal funds rate will depend on incoming data.

While the Fed chief acknowledged financial conditions have recently become less supportive of growth, she does the not expect a situation where it is necessary to cut interest rates.

In other bond-related news, the Treasury Department sold $23 billion worth of ten-year notes, attracting slightly below average demand.

The ten-year note auction drew a high yield of 1.730 percent and a bid-to-cover ratio of 2.56, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.65.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Finishing off this week's series of long-term securities auctions, the Treasury is due to sell $15 billion worth of thirty-year bonds on Thursday.

Yellen is also scheduled to appear before the Senate Banking Committee on Thursday, although her second day of Congressional testimony typically mirrors the first.

On the economic front, the Labor Department is scheduled to release its report on initial jobless claims in the week ended February 6th.