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Treasuries Move Back To The Downside Ahead Of Fed Announcement

4/24/2012 3:28 PM ET

After showing a strong upward move in the previous session, treasuries gave back some ground during trading on Tuesday.

Bond prices moved to the downside in early trading and remained stuck in the red throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.8 basis points to 1.961 percent.

The modest upward move by the ten-year yield came after it ended the previous session at its lowest closing level in almost two months.

The pullback by treasuries came amid the release of a mixed batch of U.S. economic data, including a report from the Commerce Department showing that new home sales fell in the month of March but still came in well above economist estimates.

The report showed that new home sales fell 7.1 percent to an annual rate of 328,000 in March from an upwardly revised February rate of 353,000. Despite the drop, sales came in above economist estimates for a rate of 318,000.

A separate report from the Conference Board showed that U.S. consumer confidence was virtually unchanged in the month of April

Treasuries saw continued weakness following the release of the results of the Treasury Department's auction of $35 billion worth of two-year notes.

The two-year note auction drew a high yield of 0.27 percent and a bid-to-cover ratio of 3.76, while the ten previous two-year note auctions had an average bid-to-cover ratio of 3.56.

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

Nonetheless, trading activity was relatively subdued ahead of the Federal Reserve's monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates at near-zero levels, but traders will pay close attention to any comments regarding the outlook for further quantitative easing.

Ahead of the announcement from the Fed, traders are likely to keep an eye on the Commerce Department's report on durable goods orders.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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