Treasuries moved notably higher over the course of the trading day on Tuesday, extending the upward move seen in recent sessions.
After moving modestly higher in early trading, bond prices saw further upside as the day progressed, closing firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.9 basis points to 1.988 percent.
With the drop, the ten-year yield closed lower for the fifth consecutive session, falling to its lowest closing level in a month.
The continued strength among treasuries came amid another sell-off on Wall Street, with the Dow falling by more than 200 points.
Concerns about the global economic outlook contributed to the continued weakness among stocks, as traders continued to digest last Friday's disappointing jobs report.
Uncertainty about the upcoming earnings season also contributed to the pullback on Wall Street and the subsequent strength among treasuries.
Alcoa (AA) is scheduled to release its first quarter results after the close of trading, with the release of results from the aluminum giant seen as the unofficial start of earnings season.
Treasuries saw continued strength following the release of the results of the Treasury Department's auction of $32 billion worth of three-year notes, which attracted average demand.
The three-year note auction drew a high yield of 0.427 percent and a bid-to-cover ratio of 3.36, while the ten previous three-year note auctions had an average bid-to-cover ratio of 3.37.
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 Miller Tabak, said, "In the context of obvious weakness in global markets, the save haven 3-year note auction was uneventful."
While bond traders are likely to keep an eye on Wall Street on Wednesday, trading could also be impacted by the results of the Treasury's auction of $21 billion worth of ten-year notes.
by RTT Staff Writer
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