Treasuries Give Back Ground Following Recent Strength

(RTTNews) - Treasuries showed a modest move to the downside during trading on Wednesday, giving back ground after moving notably higher over the past several sessions.

Bond prices moved lower early in the session and remained in negative territory throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose 2.9 basis points to 4.492 percent.

The modest pullback by treasuries partly reflected profit taking following a five-day winning streak, which dragged the ten-year yield down to its lowest levels in almost a month.

Lingering uncertainty about the outlook for interest rates also weighed on treasuries following Tuesday's remarks by Minneapolis Federal Reserve President Neel Kashkari.

Kashkari suggested interest rates may need to remain at current levels for an "extended period" and said he couldn't rule out another rate increase.

The Federal Reserve is still widely expected to lower rates sometime in the third quarter, however, with CME Group's FedWatch Tool currently indicating an 83.5 percent chance rates will be lower by September.

Bond prices remained in the red as the Treasury Department revealed this month's auction of $42 billion worth of ten-year notes attracted average demand.

The ten-year note auction drew a high yield of 4.483 percent and a bid-to-cover ratio of 2.49, while the ten previous ten-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.

Trading on Thursday may be impacted by reaction to the Labor Department's report on initial jobless claims in the week ended May 4th.