After moving slightly higher over the past few sessions, treasuries showed a notable move back to the downside during trading on Tuesday.
Bond prices climbed off their worst levels going into the close but remained stuck firmly in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed by 6.1 basis points to 2.198 percent.
The increase by the ten-year yield came after it edged down to its lowest closing level in over seven months in the previous session.
The pullback by treasuries came following the release of a report from the Conference Board showing an unexpected improvement in U.S. consumer confidence in the month of June.
The Conference Board said its consumer confidence index rose to 118.9 in June from a downwardly revised 117.6 in May.
The increase came as a surprise to economists, who had expected the index to drop to 116.7 from the 117.9 originally reported for the previous month.
Treasuries saw continued weakness following the release of the results of the Treasury Department’s auction of $34 billion worth of five-year notes, ,which attracted below average demand.
The five-year note auction drew a high yield of 1.828 percent and a bid-to-cover ratio of 2.33, while the ten previous five-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.
The Treasury is due to finish off this week’s series of long-term securities auctions with the sale of $28 billion worth of seven-year notes on Wednesday.
Trading on Wednesday may also be impacted by reaction to a National Association of Realtors report on pending home sales in the month of May.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
The material has been provided by InstaForex Company – www.instaforex.com