Treasuries Close Moderately Higher In Reaction To Auction Results

(RTTNews) - Treasuries ended Wednesday's trading moderately higher, benefiting from a positive reaction to the results of the Treasury Department's ten-year note auction.

Bond prices spiked higher following the release of the auction results and remained positive for the remainder of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its prices, fell by 3.9 basis points to 2.92 percent.

The strength among treasuries came on the heels of the release of the results of the Treasury's auction of $21 billion worth of ten-year notes, which attracted above average demand.

The ten-year note auction drew a high yield of 2.946 percent and a bid-to-cover ratio of 2.86, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.73.

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

Peter Boockvar, chief market analyst at the Lindsey Group, said, "Bottom line, outside of Syria, we know the most important short term focus of the market is next week's FOMC meeting and we will likely get a taper but only $10-15b."

"At this reduced level, the sharp increase in interest rates over the past few months I continue to believe has priced in this Fed move and this good auction result today reflects that," he added.

In economic news, the Commerce Department released a report showing that U.S. wholesale inventories rose by less than expected in July.

The report said wholesale inventories inched up by 0.1 percent in July following a 0.2 percent decrease in June. Economists had expected inventories to rise by 0.3 percent.

Trading on Thursday may be impacted by the release of the Labor Department's reports on weekly jobless claims and import and export prices.

Bond traders are also likely to keep an eye on the results of the Treasury's auction of $13 billion worth of thirty-year bonds.