Treasuries Extend Move To The Upside Seen In Previous Session

(RTTNews) - Treasuries moved to the upside during trading on Tuesday, extending the upward move seen over the course of the previous session.

Bond prices moved steadily higher as the day progressed before closing firmly in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.3 basis points to 0.778 percent.

The strength among treasuries came amid concerns about the recent spike in coronavirus cases as well as continued uncertainty about the prospects for a new stimulus bill.

Traders were also reacting to some mixed economic data, with separate reports showing a jump in durable goods orders and an unexpected dip in consumer confidence.

The Commerce Department released a report before the start of trading showing new orders for U.S. manufactured durable goods jumped by much more than expected in the month of September.

The report said durable goods orders surged up by 1.9 percent in September after rising by rising by 0.4 percent in August. Economists had expected durable goods orders to increase by 0.5 percent.

The much stronger than expected growth in durable goods orders came as orders for transportation equipment soared by 4.1 percent in September after slumping by 0.9 percent in August.

Excluding the spike in orders for transportation equipment, durable goods orders climbed by 0.8 percent in September compared to a 1.0 percent jump in the previous month. Ex-transportation orders were expected to rise by 0.4 percent.

Meanwhile, the Conference Board released a report unexpectedly showing a slight drop in confidence in the month of October.

The Conference Board said its consumer confidence index edged down to 100.9 in October after jumping to a revised 101.3 in September.

The pullback surprised economists, who had expected the index to inch up to 102.0 from the 101.8 originally reported for the previous month.

"Consumers' assessment of current conditions improved while expectations declined, driven primarily by a softening in the short-term outlook for jobs," said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

She added, "There is little to suggest that consumers foresee the economy gaining momentum in the final months of 2020, especially with COVID-19 cases on the rise and unemployment still high."

Separately, the Treasury Department revealed that its sale of $54 billion worth of two-year notes attracted modestly above average demand.

The two-year note auction drew a high yield of 0.151 percent and a bid-to-cover ratio of 2.41, while the ten previous two-year note auctions had an average bid-to-cover ratio of 2.35.

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 announce the results of its auction of $55 billion worth of five-year notes on Wednesday and the results of its auction of $53 billion worth of seven-year notes on Thursday.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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