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Treasuries Regain Ground Following Recent Weakness

After trending lower over the past few sessions, treasuries regained some ground during the trading day on Tuesday.

Bond prices moved to the upside early in the session and remained firmly positive throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.1 basis points to 2.624 percent.

The pullback by the ten-year yield came after it climbed to its highest closing level in well over three years on Monday.

Treasuries remained firmly positive following the release of the results of the Treasury Department's auction of $26 billion worth of two-year notes, which attracted above average demand.

The two-year note auction drew a high yield of 2.066 percent and a bid-to-cover ratio of 3.22, while the ten previous two-year note auctions had an average bid-to-cover ratio of 2.83.

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

On Wednesday, the Treasury is due to sell $34 billion worth of five-year note, with bond traders likely to keep an eye on the results.

Trading on Wednesday may also be impacted by reaction to the National Association of Realtors' report on existing home sales in the month of December.

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