Treasuries Give Back Ground Amid Profit Taking

(RTTNews) - After moving notably higher over the two previous sessions, treasuries gave back some ground during trading on Monday.

Bond prices moved to the downside early in the session and remained in negative territory throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.4 basis points to 1.497 percent.

With the increase on the day, the ten-year yield rebounded after ending last Friday's trading at its lowest closing level in over a month.

The pullback by treasuries was partly due to profit taking, as traders cashed in some of the recent strength among bonds, which had benefited from indications the Federal Reserve is not in a hurry to raise interest rates.

Bond prices saw some further downside after the Treasury Department revealed this month's auction of $56 billion worth of three-year notes attracted below average demand.

The three-year note auction drew a high yield of 0.750 percent and a bid-to-cover ratio of 2.33, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.46.

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

Looking ahead, trading on Tuesday may be impacted by reaction to the Labor Department's report on producer prices in the month of October.

Bond traders are also likely to keep an eye on the results of the Treasury's auction of $39 billion worth of ten-year notes.