Treasuries Close Modestly Higher After Three-Year Note Auction

(RTTNews) - After initially showing a lack of direction, treasuries moved modestly higher over the course of the trading day on Tuesday.

Bond prices moved to the upside in afternoon trading, ending the day slightly above the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.8 basis points to 2.766 percent.

With the modest drop on the day, the ten-year yield pulled back further off the one-month closing high that it set last Friday.

The upward move by treasuries seemed to reflect a positive reaction to the Treasury Department's auction of $30 billion worth of three-year notes.

The three-year note auction drew a high yield of 0.802 percent and a bid-to-cover ratio of 3.25, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 3.29.

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

Meanwhile, traders largely shrugged off the release of a report from the Commerce Department showing that wholesale inventories rose by more than expected in the month of January.

The report said wholesale inventories climbed 0.6 percent in January following an upwardly revised 0.4 percent increase in December. Economists had expected inventories to rise by 0.4 percent.

A separate report from the Labor Department showed an uptick in job openings in January, but the data was generally seen as old news.

Amid another quiet day on the U.S. economic front, trading on Wednesday may be impacted by reaction to the results of the Treasury Department's auction of $21 billion worth of ten-year notes.

Nonetheless, traders are likely to be looking ahead to the release of closely watched reports on retail sales and producer prices later in the week.