Treasuries Close Modestly Higher, Climbing Further Off Recent Lows

(RTTNews) - Treasuries moved modestly higher during trading on Monday, climbing further off the lows set following the release of Federal Reserve minutes last week.

After moving moderately higher in early trading, bond prices moved roughly sideways for the remainder of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.1 basis points to 2.741 percent.

With the modest drop on the day, the ten-year yield pulled back further off the two-month closing high set last Wednesday.

The modest strength among treasuries was partly due to the release of a report from the National Association of Realtors showing an unexpected drop in pending home sales.

NAR said its pending home sales index dipped 0.6 percent to 102.1 in October from an upwardly revised 102.7 in September. The modest drop came as a surprise to economists, who had been expecting pending sales to rise by 1.1 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Meanwhile, traders largely shrugged off the release of the results of the Treasury Department's auction of $32 billion worth of two-year notes, which attracted above average demand.

The two-year note auction drew a high yield of 0.300 percent and a bid-to-cover ratio of 3.54, while the ten previous three-year note auctions had an average bid-to-cover ratio of 3.28.

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 is likely to attract attention on Tuesday, with traders likely to keep an eye on the release of reports on housing starts, home prices, and consumer confidence.

Bond trading could also be impacted by the release of the results of the Treasury's auction of $35 billion worth of five-year notes.