Treasuries Show Notable Move Back To The Downside

(RTTNews) - After ending last Friday's trading considerably higher, treasuries showed a notable move back to the downside during trading on Monday.

Bond prices moved steadily lower for much of the session before closing firmly in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.7 basis points to 2.359 percent.

The pullback by treasuries was partly in reaction to data out of China, with a report from Chinese Customs showing stronger than expected export growth in the month of October.

The report said Chinese exports were up by 11.6 percent year-over-year in October, reflecting a slowdown from the 15.3 percent growth seen in September but above economist estimates.

However, Peter Boockvar, managing director at the Lindsey Group, noted that a sharp jump in exports to Hong Kong raises questions about invoice inflated figures.

A separate report from the Chinese National Bureau of Statistics showed that annual consumer price inflation in China remained unchanged at a five-year low of 1.6 percent in October.

Treasuries saw continued weakness following the release of the results of the Treasury Department's auction of $26 billion worth of three-year notes, which attracted below average demand.

The three-year note auction drew a high yield of 0.998 percent and a bid-to-cover ratio of 3.18, while the ten previous three-year note auctions had an average bid-to-cover ratio of 3.31.

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

Following the Veterans Day holiday on Tuesday, the results of the Treasury's auction of $24 billion worth of ten-year notes are likely to be in focus when bond trading resumes on Wednesday.