Treasuries Close Modestly Higher After Seeing Some Volatility

(RTTNews) - Treasuries saw some volatility over the course of the trading session on Thursday but managed to end the day moderately higher.

After moving higher in morning trading, bond prices pulled back near the unchanged before rebounding going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.3 basis points to 2.702 percent.

With the modest drop on the day, the ten-year yield added to the loss posted in the previous session, pulling back further off the nearly two-month highs set on Tuesday.

The early strength among treasuries was partly in reaction to Janet Yellen's testimony at her confirmation hearing before the Senate Banking Committee.

Yellen, the nominee to succeed Federal Reserve Chairman Ben Bernanke, defended the ultra-easy monetary policy that has seen the central bank's balance sheet more than quadruple since 2008 to nearly $4 trillion.

"Under the wise and skillful leadership of Chairman Bernanke, the Fed helped stabilize the financial system, arrest the steep fall in the economy, and restart growth," Yellen told the committee.

She added, "We have made good progress, but we have farther to go to regain the ground lost in the crisis and the recession."

Yellen argued that unemployment remains too high for the Fed to consider significantly scaling back its $85 billion a month in asset purchases.

"I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy," Yellen said.

However, treasuries gave back some ground due in part to disappointing results from the Treasury Department's auction of $16 billion worth of thirty-year bonds on Thursday.

The thirty-year bond auction drew a high yield of 3.810 percent and a bid-to-cover ratio of 2.16, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.48.

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

While traders largely shrugged off today's mixed batch of economic data, trading on Friday may be impacted by the release of reports on import and export prices, industrial production, and New York manufacturing activity.