Treasuries Move Higher Following Solid Five-Year Note Auction

(RTTNews) - Treasuries moved to the upside over the course of the trading day on Wednesday, benefiting from a solid five-year note auction.

After seeing modest strength in morning trading, bond prices surged higher following the release of the auction results. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.4 basis points to 2.701 percent.

The strength among treasuries came as the Treasury Department revealed that its auction of $35 billion worth of five-year notes attracted above average demand.

The five-year note auction drew a high yield of 1.715 percent and a bid-to-cover ratio of 2.99, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.60.

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, managing director at the Lindsey Group, said, "Following the mixed 2-year note auction yesterday and Janet Yellen and the FOMC last week, the 5-year auction was solid."

On the economic front, the Commerce Department released a report showing that durable goods orders rose by much more than expected in February.

The report said durable goods orders surged up by 2.2 percent in February following a revised 1.3 percent decrease in January. Economists had expected orders to increase by about 1.0 percent.

However, when excluding a jump in orders for transportation equipment, durable goods orders inched up by just 0.2 percent in February compared to economist estimates for a 0.3 percent increase.

Economic data may attract some attention on Thursday, with traders likely to keep an eye on reports on weekly jobless claims and pending home sales.

The Commerce Department is also scheduled to release its final report on fourth quarter GDP, although the data is likely to be viewed as old news.

Bond trading could also be impacted by the reaction to the results of the Treasury's auction of $29 billion worth of seven-year notes.