Treasuries Move Back To The Downside Amid Rebound By Crude Oil

(RTTNews) - After ending the previous session notably higher, treasuries moved back to the downside over the course of the trading day on Wednesday.

Bond prices came under pressure in early trading and saw some further downside as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6 basis points to 1.892 percent.

The pullback by treasuries was partly due to a sharp increase by the price of crude oil, which rebounded after yesterday's steep drop.

Crude oil for April delivery jumped $1.79 to a three-month closing high of $38.29 a barrel after tumbling $1.40 to $36.50 a barrel on Tuesday.

The price of crude oil benefited from a positive reaction to the Energy Information Administration's weekly report on oil inventories.

The EIA said crude oil inventories increased by 3.9 million barrels in the week ended March 4th, matching the consensus estimate.

The report also said gasoline inventories slumped by 4.5 million barrels, while distillate fuel inventories fell by 1.1 million barrels.

Treasuries saw some further downside in reaction to the results of the Treasury Department's auction of $20 billion worth of ten-year notes, which attracted below average demand.

The ten-year note auction drew a high yield of 1.895 percent and a bid-to-cover ratio of 2.49, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.64.

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, the Treasury is due to finish off this week's series of long-term securities auctions with the sale of $12 billion worth of thirty-year bonds on Thursday.

Trading on Thursday may also be impacted by the European Central Bank's monetary policy announcement as well as a report on weekly jobless claims.