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Treasuries Climb Off Worst Levels But Still Close Lower

Treasuries moved to the downside during trading on Tuesday, extending the notable pullback seen in the previous session.

Bond prices climbed off their worst levels in afternoon trading but remained firmly negative. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6 basis points to 0.736 percent.

Treasuries initially came under pressure as traders continue to react to recent signs that the spread of the coronavirus is slowing in hot spots such as New York.

New York Governor Andrew Cuomo said Monday that the number of new coronavirus deaths in the state was "effectively flat" for two days.

However, treasuries regained some ground after Cuomo revealed earlier today that coronavirus deaths spiked by 731 on Monday, reflecting the biggest one-day increase.

Cuomo cautioned that the number of deaths is a lagging indicator, noting that the pace of growth in hospitalizations and intensive-care admissions has still slowed in recent days.

Treasuries also seemed to benefit from the results of the Treasury Department's auction of $25 billion worth of ten-year notes, which attracted average demand.

The ten-year note auction drew a high yield of 0.782 percent and a bid-to-cover ratio of 2.43, which matched the average bid-to-cover ratio for the ten previous ten-year note auctions.

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 Monday, the Treasury revealed that its auction of $40 billion worth of three-year notes attracted below average demand.

The Treasury is scheduled to announce the results of its auction of $17 billion worth of thirty-year bonds on Wednesday.

Trading on Wednesday may also be impacted by reaction to the minutes of the Federal Reserve's March meetings, which may shed additional lights on last month's emergency interest rate cuts as well as the central bank's unlimited expansion of its asset purchases.

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