Treasuries Move To The Downside Amid Strength On Wall Street

(RTTNews) - After ending the previous session modestly lower, treasuries saw some further downside during the trading day on Wednesday.

Bond prices moved lower early in the session and remained stuck in negative territory throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.5 basis points to 3.004 percent.

The continued weakness among treasuries came as stocks on Wall Street moved notably higher along with the price of crude oil.

Crude oil for June delivery spiked $2.08 to $71.14 a barrel as traders reacted to President Donald Trump's decision to withdraw from the Iran nuclear deal.

Trump harshly criticized the nuclear agreement with Iran in remarks from the White House on Tuesday and signed a memorandum re-imposing sanctions on Iran.

"I am announcing today that the United States will withdraw from the Iran nuclear deal," Trump said. "We will be instituting the highest level of economic sanctions."

"The United States no longer makes empty threats," added Trump, who criticized the deal throughout his presidential campaign. "When I make promises, I keep them."

On the U.S. economic front, the Labor Department released a report showing a modest uptick in producer prices in the month of April.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in April after rising by 0.3 percent in March. Economists had expected prices to edge up by 0.2 percent.

Excluding food and energy prices, core producer prices rose by 0.2 percent in April after climbing by 0.3 percent in the previous month. The increase in core prices matched economist estimates.

Meanwhile, bond traders largely shrugged off the results of the Treasury Department's auction of $25 billion worth of ten-year notes, which attracted above average demand.

The ten-year note auction drew a high yield of 2.995 percent and a bid-to-cover ratio of 2.56, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.43.

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

Looking ahead, the Treasury is due to finish off this week's series of long-term securities auctions with the sale of $17 billion worth of thirty-year bonds on Thursday.

Trading on Thursday may also be impacted by reaction to reports on consumer prices and weekly jobless claims.