Treasuries End Choppy Trading Day Roughly Flat

(RTTNews) - After recovering from an early move to the downside, treasuries showed a lack of direction for much of the trading day on Tuesday.

Bond prices spent much of the session lingering near the unchanged line before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.735 percent.

The lackluster performance by treasuries came as traders continued to express some uncertainty about the economic outlook amid the release of a mixed batch of data.

In an upbeat sign for the economy, the Conference Board released a report showing a significant improvement in consumer confidence in the month of March.

The Conference Board said its consumer confidence index jumped to 82.3 in March from a revised 78.3 in February, while economists had been expecting the index to edge up to 78.4.

With the much bigger than expected increase, the consumer confidence index reached its highest level since January of 2008.

However, a separate report from the Commerce Department showing a drop in new home sales helped to keep the economic optimism in check.

The report said new home sales fell 3.3 percent to an annual rate of 440,000 in February from the revised January rate of 455,000. The drop pulled home sales down to their lowest level since last September.

Economists had been expecting new home sales to drop 6 percent to 440,000 from the 468,000 originally reported for the previous month.

Meanwhile, bond traders largely shrugged off the results of the Treasury Department' auction of $32 billion worth of two-year notes.

The two-year note auction drew a high yield of 0.469 percent and a bid-to-cover ratio of 3.20, while the ten previous two-year note auctions had an average bid-to-cover ratio of 3.30.

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 could be impacted by the Commerce Department's report on durable good orders in the month of February. The Treasury is also due to auction $35 billion worth of five-year notes.