Treasuries Come Under Pressure After Early Move To The Upside

(RTTNews) - After moving to the upside early in the session, treasuries came under pressure over the course of the trading day on Wednesday.

Bond prices pulled back well off their early highs and eventually slid firmly into negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose 3.6 basis points to 4.178 percent after hitting a low of 4.086 percent.

With the significant turnaround as the day progressed, the ten-year yield reached its highest closing level in well over a month.

Treasuries initially gave back ground after Standard & Poor's released a report showing U.S. businesses signaled a stronger upturn in activity at the start of the year.

The report said the S&P Global Flash U.S. PMI Composite Output Index jumped to 52.3 in January from 50.9 in December, signaling the fastest increase in business activity since 2023.

The pullback also came as the Bank of Canada left interest rates unchanged, saying its Governing Council is "still concerned about risks to the outlook for inflation, particularly the persistence in underlying inflation."

Treasuries saw further downside in afternoon trading after the Treasury Department revealed this month's auction of $61 billion worth of five-year notes attracted well below average demand.

The five-year note auction drew a high yield of 4.055 percent and a bid-to-cover ratio of 2.31, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.51.

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 Thursday may be impacted by reaction to a slew of U.S. economic data, including reports on weekly jobless claims, durable goods orders and fourth quarter GDP.