Treasuries Close Higher But Off Best Levels Of The Day

(RTTNews) - Following the holiday weekend, treasuries saw modest strength during trading on Monday but closed off their best levels of the day.

Bond prices showed a notable move to the upside in morning trading but pulled back off their highs in afternoon trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.8 basis points to 2.225 percent.

The early strength among treasuries was partly due to a pullback by stocks, which gave back ground after moving sharply higher last week.

Treasuries also benefited from a steep drop by the price of crude oil, which also pulled back after last week's strength.

Crude oil for February delivery tumbled $1.29 to $36.81 a barrel after jumping $2.04 or 5.7 percent to $38.10 a barrel in the previous week.

However, treasuries pulled back off their highs following the Treasury Department's auction of $26 billion worth of two-year notes, which attracted below average demand.

The two-year note auction drew a high yield of 1.056 percent and a bid-to-cover ratio of 2.80, while the ten previous two-year note auctions had an average bid-to-cover ratio of 3.29.

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

Trading on Tuesday may be impacted by reaction to the latest U.S. economic data, including reports on home prices and consumer confidence.