Treasuries Move Sharply Higher Following Mixed Data

Treasuries moved sharply higher over the course of the trading day on Wednesday, extending the upward move seen in the previous session.

Bond prices showed a notable advance in early trading and saw further upside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 10.7 basis points to 3.692 percent.

The ten-year yield added to the 6.6 basis point drop seen on Tuesday, falling to its lowest closing level in over a month.

The strength among treasuries came as traders digest a mixed batch of U.S. economic data, looking for additional clues about the outlook for interest rates.

Early this morning, the Commerce Department released a report showing a significant increase in U.S. retail sales in the month of October.

The report showed retail sales surged by 1.3 percent in October after coming in unchanged in September. Economists had expected retail sales to jump by 1.0 percent.

Excluding a sharp increase in sales by motor vehicle and parts dealers, retail sales still shot up by 1.3 percent in October after inching up by 0.1 percent in September. Ex-auto sales were expected to rise by 0.4 percent.

Meanwhile, the Federal Reserve released a separate report unexpectedly showing a modest decrease in U.S. industrial production in the month of October.

The Fed said industrial production edged down by 0.1 percent in October following a revised 0.1 percent uptick in September.

The dip surprised economists, who had expected industrial production to inch up by 0.2 percent compared to the 0.4 percent increase originally reported for the previous month.

The National Association of Home Builders also released a report showing a continued decrease in U.S. homebuilder confidence in the month of November.

The report showed the NAHB/Wells Fargo Housing Market Index declined for the 11th consecutive month, slumping to 33 in November after tumbling to 38 in October. Economists had expected the index to dip to 36.

With the bigger than expected decrease, the index fell to its lowest reading since June 2012, with the exception of the onset of the pandemic in the spring of 2020.

Treasuries saw further upside as the Treasury Department revealed this month's auction of $15 billion worth of twenty-year bonds attracted above average demand.

The twenty-year bond auction drew a high yield of 4.072 percent and a bid-to-cover ratio of 2.64, while the ten previous twenty-year bond auctions had an average bid-to-cover ratio of 2.56.

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

Economic data may continue to attract attention on Thursday, with traders likely to keep an eye on reports on weekly jobless claims, housing starts and Philadelphia-area manufacturing activity.

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