Ten-Year Yield Reaches Highest Closing Level In A Month

(RTTNews) - After ending the previous session roughly flat, treasuries showed a notable move to the downside during trading on Wednesday.

Bond prices moved lower early in the session and slid more firmly into negative territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.2 basis points to 1.543 percent.

With the notable increase on the day, the ten-year yield ended the session at its highest closing level in a month.

The weakness among treasuries came as concerns about the Omicron variant of the coronavirus have continued to ease, reducing the appeal of safe haven assets like bonds.

While the Omicron variant has contributed to a surge in new coronavirus cases around the world, traders seem optimistic that the milder symptoms associated with the new strain will not lead to a significant economic slowdown.

Bond prices saw continued weakness after the Treasury Department revealed this month's auction of $56 billion worth of seven-year notes attracted below average demand.

The seven-year note auction drew a high yield of 1.480 percent and a bid-to-cover ratio of 2.21, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.28.

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

Earlier this week, the Treasury revealed this month's auction of $56 billion worth of two-year notes and $57 billion worth of five-year notes both attracted modestly above average demand.

In U.S. economic news, a report released by the National Association of Realtors showed an unexpected pullback in pending home sales in the month of November.

NAR said its pending home sales index slid 2.2 percent to 122.4 in November after spiking 7.5 percent to 125.2 in October. The decrease surprised economists, who had expected pending home sales to rise by 0.5 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Looking ahead, trading on Thursday may be impacted by reaction to the weekly jobless claims data along with a report on Chicago-area business activity.