Treasuries Extend Downward Trend Amid Quiet Day

(RTTNews) - After ending the previous session moderately lower, treasuries saw some further downside over the course of the trading day on Wednesday.

Bond prices drifted lower in morning trading and remained stuck in the red throughout the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.4 basis points to 2.763 percent.

With the increase on the day, the ten-year yield extended a recent upward trend, climbing further off the three-month closing low set early this month.

The weakness among treasuries came as traders continued to digest new Federal Reserve Chair Janet Yellen's testimony before the House Financial Services Committee.

In prepared remarks, Yellen indicated that she expects a great deal of continuity with the policies of her predecessor Ben Bernanke.

Traders were also reacting to the results of the Treasury Department's auction of $24 billion worth of ten-year notes, which attracted slightly below average demand.

The ten-year note auction drew a high yield of 2.795 percent and a bid-to-cover ratio of 2.54, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.65.

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, chief market analyst at the Lindsey Group, said, "With the backup in yields to a 3-week high, the 10-year note auction was mediocre."

Trading activity is likely to pick up on Thursday amid the release of reports on weekly jobless claims, retail sales, and business inventories. Yellen's second day of testimony of Capitol Hill may also attract some attention.

Additionally, the Treasury is due to sell $16 billion worth of thirty-year bonds, finishing off this week's series of long-term securities auctions.