Treasuries Move Higher Ahead Of Yellen Speech

(RTTNews) - Following the long Easter weekend, treasuries moved moderately higher over the course of the trading session on Monday.

Bond prices moved to the upside in morning trading and remained positive throughout the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3 basis points to 1.87 percent.

The strength among treasuries came as traders expressed some anxiety ahead of the release of closely watched data in the coming days, including the monthly jobs report on Friday.

Federal Reserve Chair Janet Yellen is also scheduled to deliver a speech to the Economic Club of New York on Tuesday, potentially shedding some light on the outlook for interest rates.

Recent remarks by Fed officials have increased speculation that the Fed could raise interest rates at its next meeting in April.

Treasuries remained firmly positive in the afternoon even though the Treasury Department's auction of $26 billion worth of two-year notes attracted well below average demand.

The two-year note auction drew a high yield of 0.877 percent and a bid-to-cover ratio of 2.58, while the ten previous two-year note auctions had an average bid-to-cover ratio of 3.13.

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

Earlier in the day, the Commerce Department released a report showing a slightly bigger than expected increase in personal income in the month of February.

The report said personal income rose by 0.2 percent in February after climbing by 0.5 percent in January. Economists had expected income to tick up by 0.1 percent.

The Commerce Department also said personal spending inched up by 0.1 percent in February, matching the downwardly revised uptick seen in the previous month.

The slight increase in spending matched economist estimates, although spending in January was downwardly revised from the originally reported 0.5 percent growth.

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

NAR said its pending home sales index climbed 3.5 percent to 109.1 in February from a downwardly revised 105.4 in January. Economists had expected the index to increase by about 1.5 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.

Yellen's speech will be in focus on Tuesday, likely overshadowing reports on home prices and consumer confidence as well as an auction of $34 billion worth of five-year notes.