Treasuries Regain Ground Following Recent Weakness

(RTTNews) - Treasuries saw modest strength during trading on Tuesday, regaining some ground after trending lower over the past several sessions.

Bond prices moved to the upside early in the session and managed to remain in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.8 basis points to 2.321 percent.

With the modest drop on the day, the ten-year yield gave back some ground after ending the previous session at its highest closing level in a year.

Bargain hunting contributed to the rebound, as traders picked up treasuries at reduced levels following recent weakness.

Treasuries saw continued strength following the release of the results of the Treasury Department's auction of $34 billion worth of five-year notes, which attracted average demand.

The five-year note auction drew a high yield of 1.760 percent and a bid-to-cover ratio of 2.44, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.43.

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 $28 billion worth of seven-year notes on Wednesday.

On the U.S. economic front, the National Association of Realtors released a report showing that existing home sales unexpectedly climbed to their highest rate in nearly a decade in October.

NAR said existing home sales rose by 2.0 percent to an annual rate of 5.60 million in October after jumping by 3.6 percent to a revised 5.49 million in September.

The increase surprised economists, who had expected existing home sales to drop by 0.9 percent to a rate of 5.42 million in October from the 5.47 million originally reported for the previous month.

With the unexpected increase, existing home sales rose to their highest rate since reaching 5.79 million in February of 2007.

A slew of economic data is likely to attract attention on Wednesday, with reports on weekly jobless claims, durable goods orders, new home sales, and consumer sentiment are all due to be released.

The Federal Reserve is also scheduled to release the minutes of its latest monetary policy meeting, which could shed some additional light on the outlook for interest rates.