Treasuries Close Firmly In Negative Territory

(RTTNews) - After ending the previous session nearly flat, treasuries showed a significant move to the downside during trading on Tuesday.

Bond prices initially showed a lack of direction but slid 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 1.734 percent.

The drop by treasuries came amid continued uncertainty about the outlook for interest rates ahead of next week's Federal Reserve meeting.

While recent disappointing economic data has led many analysts to predict that the Fed will leave rates unchanged, a few central bank officials have made hawkish comments.

The Fed is scheduled to hold a two-day meeting starting next Tuesday and announce its policy decision next Wednesday afternoon.

The central bank is also due to reveal its updated economic forecasts followed by a press conference by Fed Chair Janet Yellen.

Adding to the uncertainty about the outlook for rates was the lack of major U.S. economic data released on the day.

The economic calendar will pick up considerably in the coming days with the release of reports on retail sales, industrial production, and producer and consumer price inflation.

Treasuries saw continued weakness following the release of the results of the Treasury Department's auction of $12 billion worth of thirty-year bonds, which attracted below average demand.

The thirty-year bond auction drew a high yield of 2.475 percent and a bid-to-cover ratio of 2.13, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.33.

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 economic calendar remains relatively quiet on Wednesday, although traders are likely to keep an eye on a report on import and exports prices.