Treasuries Close Modestly Higher But Well Off Best Levels

(RTTNews) - Treasuries managed to finish Wednesday's trading session modestly higher but well off their best levels of the day.

After an initial move to the upside, bond prices gave back ground over the course of the trading day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.1 basis points to 2.775 percent.

While the ten-year yield climbed off its intraday low of 2.744 percent, it still ended the day at its lowest closing level in well over a month.

Treasuries initially benefited from continued weakness on Wall Street, as another sell-off by tech stocks dragged the Nasdaq down to a one-month low.

Stocks saw volatility over the course of the trading session, however, with the major averages bouncing back and forth across the unchanged line.

The pullback by treasuries also came as the Treasury Department's auction of $29 billion worth of seven-year notes attracted below average demand.

The seven-year note auction drew a high yield of 2.720 percent and a bid-to-cover ratio of 2.34, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.51.

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

Today's seven-year note auction came after the Treasury sold $30 billion worth of two-year notes on Monday and $35 billion worth of five-year notes on Tuesday.

On the U.S. economic front, the Commerce Department released a report showing stronger than previously estimated economic growth in the fourth quarter of 2017.

The report said gross domestic product climbed by 2.9 percent in the fourth quarter, reflecting an upward revision from the previously estimated 2.5 percent increase. Economists had expected the pace of GDP growth to be upwardly revised to 2.7 percent.

With the upward revision, the GDP growth in the fourth quarter reflects only a modest slowdown from the 3.2 percent jump in the third quarter.

The report paints a positive picture of the economy in the final three months of last year, although the data was likely viewed as old news.

A separate report from the National Association of Realtors showed a bigger than expected rebound in pending home sales in the month of February.

NAR said its pending home sales index jumped by 3.1 percent to 107.5 in February after plunging by 5 percent to a downwardly revised 104.3 in January. Economists had expected pending sales to climb by 2.1 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.

Trading on Thursday may be impacted by reaction to a slew of U.S. economic data, including reports on weekly jobless claims, personal income and spending, and consumer sentiment.