Treasuries Close Modestly Higher Following Three-Year Note Auction

(RTTNews) - Following the sharp pullback seen in the previous session, treasuries moved modestly higher over the course of the trading day on Tuesday.

Bond prices lingered near the unchanged line in morning trading before moving slightly to the upside in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.1 basis points to 1.893 percent.

The modestly higher close by treasuries was partly in reaction to the Treasury Department's auction of $24 billion worth of three-year notes, which attracted average demand.

The three-year note auction drew a high yield of 0.865 percent and a bid-to-cover ratio of 3.25, 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.

Earlier in the day, treasuries were showing a lack of direction as traders looked ahead to the release of minutes of the latest Federal Reserve meeting on Wednesday.

The minutes could shed some additional light on the outlook for interest rates, although it is worth noting that the meeting came before last Friday's disappointing jobs report.

While the Fed minutes are likely to be in focus on Wednesday, bond traders are also likely to keep an eye on the results of the Treasury's auction of $21 billion worth of ten-year notes.