Treasuries Close Modestly Higher After Two-Year Note Auction

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

Bond prices moved to the upside in afternoon trading and hung onto slim gains going into the close. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.2 basis points to 2.25 percent.

The strength that emerged among treasuries came 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 0.948 percent and a bid-to-cover ratio of 3.15, while the ten previous two-year note auctions had an average bid-to-cover ratio of 3.35.

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

Earlier in the day, the National Association of Realtors released a report showing that existing home sales pulled back by a little more than expected in October.

NAR said existing home sales fell 3.4 percent to an annual rate of 5.36 million in October after surging up 4.7 percent to a rate of 5.55 million in September. Economists had expected sales to drop to a rate of 5.40 million.

Trading on Tuesday may be impacted by a batch of U.S. economic data, including the revised reading on third quarter GDP as well as reports on international trade, home prices, and consumer confidence.