Treasuries Move Back To The Upside After Pulling Back Off Early Highs

Treasuries gave back ground after seeing initial strength but moved back to the upside over the course of the trading session on Wednesday.

Bond prices bounced back firmly into positive territory after pulling back near the unchanged line. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.5 basis points to 3.877 percent.

The ten-year yield moved lower for the seventh time in the past eight sessions, falling to its lowest closing level in almost five months.

Treasuries pulled back off their early highs following the release of a report from the Conference Board showing U.S. consumer confidence has improved by much more than anticipated in the month of December.

The Conference Board said its consumer confidence index jumped to 110.7 in December from a downwardly revised 101.0 in November.

Economists had expected the consumer confidence index to rise to 103.4 from the 102.0 originally reported for the previous month.

While the data partly offset the safe-haven appeal of bonds, buying interest remerged in afternoon trading amid ongoing optimism about the outlook for interest rates.

Meanwhile, the Treasury Department announced the results of this month’s auction of $13 billion worth of twenty-year bonds, revealing the sale attracted below average demand.

The twenty-year bond auction drew a high yield of 4.213 percent and a bid-to-cover ratio of 2.55, while the ten previous twenty-year bond auctions had an average bid-to-cover ratio of 2.63.

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 a slew of U.S. economic data, including reports on weekly jobless claims, Philadelphia-area manufacturing activity and leading U.S. economic indicators.

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