Treasuries Move Back To The Downside Amid Strength On Wall Street

(RTTNews) - Treasuries saw notable weakness during trading on Tuesday, offsetting the upward move seen over the two previous sessions.

Bond prices came under pressure in early trading and saw further downside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, advanced 6.6 basis points to 2.194 percent.

The pullback by treasuries was partly due to a rally on Wall Street, with stocks rebounding following the weakness seen last week.

U.S. stocks benefited from a positive reaction to strength among Chinese stocks, which surged higher in the latter part of the trading day.

China's Shanghai Composite Index jumped by 2.9 percent on the day, contributing to a rally in other overseas markets.

The late-day strength in the Chinese market suggests state intervention despite recent reports indicating the government has abandoned attempts to boost the stock market through large-scale share purchases.

Treasuries remained stuck firmly in the red following the release of the results of the Treasury Department's auction of $24 billion worth of three-year notes, which attracted average demand.

The three-year note auction drew a high yield of 1.056 percent and a bid-to-cover ratio of 3.23, while the ten previous three-year note auctions had an average bid-to-cover ratio of 3.28.

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

Amid another light day on the U.S. economic front, trading on Wednesday may be impacted by reaction to the Treasury's auction of $21 billion worth of ten-year notes.