Treasuries Close Roughly Flat After Seeing Early Weakness

(RTTNews) - Treasuries saw weakness throughout much of the trading day on Tuesday before regaining ground in the latter part of the session.

Bond prices climbed well off their worst levels, ending the day roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 4.274 percent after hitting a three-month intraday high of 4.339 percent.

The early weakness among treasuries came following the release of a Conference Board report showing a substantial improvement by U.S. consumer confidence in the month of October.

The Conference Board said its consumer confidence index surged to 108.7 in October after tumbling to a revised 99.2 in September.

Economists had expected the consumer confidence index to inch up to 99.1 from the 98.7 originally reported for the previous month.

Selling pressure waned over the course of the session, however, as traders looked ahead to the release of some key U.S. economic data later in the week.

The Labor Department's monthly jobs report and the Federal Reserve's preferred readings on inflation are likely to be in the spotlight as traders look for clues about the outlook for interest rates.

Treasuries may also have benefited from the release of the results of the Treasury Department's auction of $44 billion worth of seven-year notes, which attracted well above average demand.

The seven-year note auction drew a high yield of 4.215 percent and a bid-to-cover ratio of 2.74, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.55.

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

Trading on Wednesday may be impacted by reaction to reports on private sector employment, third quarter GDP and pending home sales.