Treasuries Move Back To The Downside After Yesterday's Rebound

(RTTNews) - Following the rebound seen during the previous session, treasuries moved back to the downside during trading on Tuesday.

Bond prices came under pressure in early trading and remained firmly negative throughout the day. As a result the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.8 basis points to 4.142 percent.

The ten-year yield largely offset the 5.2 basis point drop seen on Monday but closed just shy of the one-month closing high set last Friday.

The pullback by treasuries came as traders looked ahead to the release of some key U.S. economic data in the coming days, including a report on personal income and spending.

The personal income and spending report includes readings on inflation said to be preferred by the Federal Reserve and could impact the outlook for interest rates.

Traders are also likely to keep an eye on reports on durable goods orders, initial jobless claims, fourth quarter GDP and new and pending home sales.

Treasuries saw continued weakness in afternoon trading after the Treasury Department revealed this month's sale of $60 billion worth of two-year notes attracted below average demand.

The two-year note auction drew a high yield of 4.365 percent and a bid-to-cover ratio of 2.57, while the ten previous two-year note auctions had an average bid-to-cover ratio of 2.72.

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

The Treasury is due to announce the results of this month's auctions of $61 billion worth of five-year notes on Wednesday.