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Treasuries Move Higher On Safe Haven Appeal

Benefiting from their appeal as a safe haven, treasuries showed a notable move to the upside during trading on Wednesday.

Bond prices moved sharply higher early in the session but gave back some ground as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dropped 4.2 basis points to 2.241 percent.

The strength among treasuries came as traders looked for safe havens amid a continued increase in tensions between the U.S. and North Korea.

President Donald Trump told reporters on Tuesday further threats from North Korea would be "met with fire, fury and frankly power the likes of which this world has never seen before."

North Korea seemed unfazed by the president's bluster, however, as state media carried a statement indicating the communist nation is "carefully examining" a plan to strike the U.S. Pacific territory of Guam.

The back-and-forth came on the heels of reports the U.S. intelligence community has determined North Korea has successfully produced a miniaturized nuclear warhead that can fit inside its missiles.

Nonetheless, treasuries gave back some ground following the release of the results of the Treasury Department's auction of $23 billion worth of ten-year notes, which attracted below average demand.

The ten-year note auction drew a high yield of 2.250 percent and a bid-to-cover ratio of 2.23, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.45.

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 $15 billion worth of thirty-year bonds on Thursday.

Trading on Thursday may also be impacted by reaction to reports on producer price inflation and weekly jobless claims.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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