09.02.2023 21:08:04

Treasuries Turn Lower Following Disappointing Thirty-Year Bond Auction

(RTTNews) - Treasuries showed a strong move to the upside at the start of trading on Thursday but came under pressure over the course of the session.

Bond prices pulled back well off their early highs and into negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3 basis points to 3.683 percent after hitting a low of 3.575 percent.

The downturn by treasuries came following the release of the results of the Treasury Department's auction of $21 billion worth of thirty-year bonds, which attracted below average demand.

The thirty-year bond auction drew a high yield of 3.686 percent and a bid-to-cover ratio of 2.25, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.37.

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

Concerns about the outlook for interest rates also continued to weigh on treasuries following hawkish comments by some Federal Reserve officials.

"Arguments are being made for the Fed to raise rates to 6%, with one strategist calling for a move towards 8%," said Edward Moya, senior maker analyst at OANDA. "A month ago, it seemed very likely that the Fed would be done raising rates in March and now that view could be changing."

A preliminary report consumer sentiment may impact trading on Friday, with traders likely to keep an eye on readings on inflation expectations.

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