Treasuries Show Strong Move Back To The Upside

(RTTNews) - Treasuries moved notably higher during trading on Wednesday, regaining some ground following the sharp pullback seen over the two previous sessions.

Bond prices showed a strong move to the upside in early trading and remained firmly positive throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.5 basis points to 1.468 percent.

The rebound by treasuries came as some traders looked to pick up bonds at reduced levels following the steep drop seen early this week.

Treasuries also benefited from a pullback by the price of crude oil, with crude for August delivery tumbling $2.05 to $44.75 a barrel after jumping $2.04 to $46.80 a barrel in the previous session.

The price of oil came under pressure following the release of a report from the Energy Information Administration showing a smaller than expected drop in crude oil inventories.

Bond prices remained firmly positive following the release of the results of the Treasury Department's auction of $12 billion worth of thirty-year bonds, which attracted above average demand.

The thirty-year bond auction drew a high yield of 2.172 percent and a bid-to-cover ratio of 2.48, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.36.

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

Late in the trading day, the Federal Reserve released its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts.

The Fed said reports from the districts indicate that economic activity continued to expand at a modest pace across most regions from mid-May through the end of June.

Trading on Thursday may be impacted by reports on weekly jobless claims and producer prices as well as speeches by a number of Fed officials.