Treasuries Close Modestly Higher Following Ten-Year Note Auction

(RTTNews) - Treasuries moved modestly higher over the course of the trading day on Wednesday, adding to the strong gains posted in the two previous sessions.

Bond prices showed a lack of direction for much of the session before moving higher in reaction to the results of a ten-year note auction. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.7 basis points to 2.109 percent.

With the modest drop on the day, the ten-year yield closed lower for the third consecutive session, pulling back further off last Friday's two-month closing high.

The modestly higher close by treasuries was largely in reaction to the results of the Treasury Department's auction of $21 billion worth of ten-year notes.

The ten-year note auction drew a high yield of 2.139 percent and a bid-to-cover ratio of 2.65, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.69.

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

Peter Boockvar, managing director at the Lindsey Group, said, "After yesterday's solid three-year note auction, today's ten-year auction was pretty good."

"The yield was a hair below the when issue but the bid to cover of 2.65 was slightly below the previous 12-month average of 2.71," he added.

Following several quiet days on the U.S. economic front, traders will be presented with a slew of data on Thursday, including reports on retail sales and weekly jobless claims.

The Treasury is also scheduled to finish off this week's series of long-term securities auctions with the sale of $13 billion worth of thirty-year bonds.