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Treasuries Close Higher Following Ten-Year Note Auction

Treasuries moved higher over the course of the trading session on Monday after showing a lack of direction in the morning.

Bond prices bounced back and forth across the unchanged line before moving to the upside going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.4 basis points to 2.870 percent.

The higher close by treasuries came after the Treasury Department's auction of $21 billion worth of ten-year notes attracted slightly above average demand.

The ten-year note auction drew a high yield of 2.889 percent and a bid-to-cover ratio of 2.50, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.43.

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

Earlier in the day, the Treasury sold $28 billion worth of three-year notes, attracting average demand

The three-year note auction drew a high yield of 2.436 percent and a bid-to-cover ratio of 2.94, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.93.

Trading activity was somewhat subdued, however, with a lack of major U.S. economic data keeping some traders on the sidelines.

In the coming days, reports on inflation, retail sales, regional manufacturing activity, housing starts and industrial production are likely to attract attention.

Reaction to the Labor Department's report on consumer prices in the month of February is likely to impact trading on Tuesday.

Consumer prices are expected to rise by 0.2 percent in February after climbing by 0.5 percent in January. Core consumer prices, which exclude food and energy prices, are also expected to edge up by 0.2 percent.

Bond traders are also likely to keep an eye on the results of the Treasury's auction of $13 billion worth of thirty-year bonds.

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