After showing a lack of direction throughout much of the session, treasuries moved to the upside going into the close of trading on Monday.
Bond prices climbed into positive territory in the final hour of trading, ending the day modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.4 basis points to 2.162 percent.
With the modest strength on the day, treasuries extended the upward move seen last Friday, further offsetting the sharp pullback seen in response to the Federal Reserve’s monetary policy announcement.
The late-day move to the upside may have reflected uncertainty ahead of the release of a slew of U.S. economic data on Tuesday.
Traders are likely to keep a close eye on reports on durable goods orders, personal income and spending and new home sales.
The National Association of Realtors released a report this morning showing that existing home sales pulled back by much more than expected in the month of November.
NAR said existing home sales tumbled 6.1 percent to a seasonally adjusted annual rate of 4.93 million in November after climbing 1.4 percent to 5.25 million in October. Economists had expected existing home sales to edge down to 5.20 million.
With the bigger than expected decrease, existing home sales fell to their lowest annual rate since hitting 4.91 million in May.
Meanwhile, traders seemed to shrug off the results of the Treasury Department’s auction of $27 billion worth of two-year notes, which attracted below average demand.
The two-year note auction drew a high yield of 0.703 percent and a bid-to-cover ratio of 3.21, while the ten previous two-year note auctions had an average bid-to-cover ratio of 3.40.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Peter Boockvar, managing director at the Lindsey Group, said, “Bottom line, even with near four-year highs in yields, the two-year auction was mediocre as the market continues to sniff out rate hikes in 2015.”
Looking ahead, the Treasury is due to sell $35 billion worth of five-year notes on Tuesday and $29 billion worth of seven-year notes on Wednesday.
The material has been provided by InstaForex Company – www.instaforex.com