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Treasuries Climb Off Worst Levels But Still Close Modestly Lower

Treasuries moved modestly lower over the course of the trading session on Tuesday after initially showing a lack of direction.

Bond prices climbed off their worst levels late in the day but remained in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.3 basis points to 3.214 percent.

The modest weakness among treasuries came as traders awaited the results of today's highly anticipated U.S. midterm elections.

The elections will decide control of both the House and the Senate and could have a major impact on President Donald Trump's ability to enact his pro-business agenda.

Democrats are seen with an easier path to retaking the House than the Senate but could still be a significant thorn in Trump's side with control of just the lower chamber.

Traders also continue to look ahead to the Federal Reserve's monetary policy announcement, with the Fed due to announce is latest decision on Thursday.

The Fed is widely expected to leave interest rates unchanged, but traders will keep a close eye on the accompanying statement for clues about an expected rate hike in December.

Bond prices climbed off their lows of the session following the release of the results of the Treasury Department's auction of $27 billion worth of ten-year notes.

The ten-year note auction drew a high yield of 3.209 percent and a bid-to-cover ratio of 2.54 percent, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.59.

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

The Treasury is due to finish off this week's long-term securities auctions on Wednesday with the sale of $19 billion worth of thirty-year bonds.

Trading on Wednesday is likely to be impacted by reaction to the outcome of the midterm elections and speculation regarding the impact on fiscal policy.

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