Treasuries Close Notably Higher Amid Continued Drop In Oil Prices

(RTTNews) - Extending the upward move seen over the past few weeks, treasuries moved notably higher over the course of the trading day on Monday.

After seeing early strength, bond prices saw some further upside as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.9 basis points to 1.912 percent.

With the drop on the day, the ten-year yield closed lower for the tenth time in eleven sessions, hitting its lowest closing level in well over a year.

The early strength among treasuries was partly due to a continued decrease by the price of crude oil, which fell to its lowest levels in almost six years.

Crude for February delivery tumbled $2.29 to $46.07 a barrel after plunging $4.33 or 8.2 percent to $48.36 a barrel last week.

The continued drop in oil prices reflected concerns about oversupply, which led analysts at Goldman Sachs to cut their three-month forecasts for the U.S. West Texas Intermediate contract to $41 from $70 a barrel.

Treasuries saw further upside following the release of the results of the Treasury Department's auction of $24 billion worth of three-year notes, which attracted average demand.

The three-year note auction drew a high yield of 0.926 percent and a bid-to-cover ratio of 3.33, while the ten previous three-year note auctions had an average bid-to-cover ratio of 3.28.

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

Amid a relatively quiet day on the U.S. economic front, trading on Tuesday may be impacted by the results of the Treasury's auction of $21 billion worth of ten-year notes.