Treasuries Close Nearly Flat For Second Straight Day

(RTTNews) - Treasuries moved modestly lower in early trading on Tuesday but recovered over the course of the session to close nearly flat for the second straight day.

Bond prices climbed well off their worst levels before moving roughly sideways going into the close. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.726 percent.

The early weakness among treasuries partly reflected continued strength on Wall Street, where stocks extended their recent upward move amid a positive reaction to the latest corporate news.

A report from the National Association of Realtors showing a smaller than expected drop in existing home sales may also have weighed on treasuries.

NAR said existing home sales edged down 0.2 percent to a seasonally adjusted annual rate of 4.59 million in March from 4.60 million in February. Economists had been expecting existing home sales to drop to an annual rate of 4.56 million.

While the drop was smaller than expected, existing home sales still fell for the seventh time in eight months and hit their lowest level since July of 2012.

The subsequent recovery by treasuries may have reflected an unwillingness to make significant moves ahead of the release of some more closely watched economic data later in the week.

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

The two-year note auction drew a high yield of 0.447 percent and a bid-to-cover ratio of 3.35, while the ten previous auctions had an average bid-to-cover ratio of 3.32.

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

More housing data may attract some attention on Wednesday, as the Commerce Department is scheduled to release its report on new home sales in March. The Treasury Department is also due to auction $35 billion worth of five-year notes.