Treasuries Climb Off Worst Levels But Still Close Lower

(RTTNews) - After ending the previous session roughly flat, treasuries moved to the downside during the trading day on Tuesday.

Bond prices moved lower in morning trading before regaining some ground in the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 1.9 basis points to 2.969 percent.

Treasuries regained ground in afternoon trading following President Donald Trump's announcement of his controversial but widely expected decision to withdraw from an international agreement intended to limit Iran's nuclear program.

Trump harshly criticized the nuclear agreement with Iran in remarks from the White House and signed a memorandum re-imposing sanctions on Iran.

"I am announcing today that the United States will withdraw from the Iran nuclear deal," Trump said. "We will be instituting the highest level of economic sanctions."

"The United States no longer makes empty threats," added Trump, who criticized the deal throughout his presidential campaign. "When I make promises, I keep them."

The agreement negotiated under former President Barack Obama involved the U.S. and Iran as well as China, France, Russia, the U.K., Germany and the European Union.

Traders largely shrugged off the results of the Treasury Department's auction of $31 billion worth of three-year notes, which attracted below average demand.

The three-year note auction drew a high yield of 2.664 percent and a bid-to-cover ratio of 2.76, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.94.

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

Following a quiet day on the U.S. economic front, trading on Wednesday may be impacted by reaction to a report on producer price inflation.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of $25 billion worth of ten-year notes.