Treasuries Close Modestly Lower But Well Off Worst Levels

(RTTNews) - After coming under pressure in early trading on Wednesday, treasuries regained ground as the day progressed but still closed modestly lower.

Bond prices moved roughly sideways in afternoon trading before closing in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.9 basis points to 2.144 percent.

The initial weakness among treasuries was partly due to bargain hunting following the strong upward move seen in the previous session.

Selling pressure remained somewhat subdued, however, as traders continued to express uncertainty about the outlook for interest rates after last week's Federal Reserve decision.

The subsequent recovery attempt by treasuries came amid continued weakness on Wall Street, as the interest rate uncertainty once again weighed on stocks.

Nonetheless, treasuries were unable to sustain to sustain the upward move and remained stuck modestly below the unchanged line.

Traders largely shrugged off the results of the Treasury Department's auction of $35 billion worth of five-year notes, which attracted slightly above average demand.

The five-year note auction drew a high yield of 1.467 percent and a bid-to-cover ratio of 2.57, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.50.

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 $29 billion worth of seven-year notes on Thursday.

However, the auction is likely to be overshadowed by reports on weekly jobless claims, durable goods orders, and new home sales, which could impact the outlook for interest rates.