Treasuries Move To The Downside After Seeing Early Strength
After moving to the upside early in the session, treasuries came under pressure over the course of the trading day on Wednesday.
Bond prices pulled back well off their early highs, ending the day modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by 1.7 basis points at 3.036 percent after hitting a low of 2.943 percent.
The downturn by treasuries came as stocks on Wall Street extended the rally seen in the previous session following upbeat earnings news from Netflix (NFLX).
Treasuries also moved to the downside ahead of tomorrow’s monetary policy decision by the European Central Bank.
The ECB is widely expected to raise rates by 25 basis points, making the central bank’s first rate hike in over a decade.
Meanwhile, traders largely shrugged off a report from the National Association of Realtors showing existing home sales tumbled by much more than expected in the month of June.
NAR said existing home sales plunged by 5.4 percent to an annual rate of 5.12 million in June after slumping by 3.4 percent to an annual rate of 5.41 million in May. Economists had expected existing home sales to decrease by 0.6 percent to a rate of 5.38 million.
Existing home sales declined for the fifth consecutive month, falling to their lowest level since June of 2020.
Traders also did not pay attention to the results of this month’s auction of $14 billion worth of twenty-year bonds, which attracted above average demand.
The twenty-year bond auction drew a high yield of 3.420 percent and a bid-to-cover ratio of 2.65, while the ten previous twenty-year bond auctions had an average bid-to-cover ratio of 2.51.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Trading on Thursday may be impacted by reaction to reports on weekly jobless claims, Philadelphia-area manufacturing activity and leading U.S. economic indicators.
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