Treasuries Extend Upward Move, Pulling Yields Further Off Last Week’s Highs

Market trading boards are seen at the Australian Securities Exchange in Sydney, Friday, February 9, 2018. ( AAP Image/Ben Rushton) NO ARCHIVING

Treasuries moved notably higher over the course of the trading day on Tuesday, extending the upward move seen in the previous session.

Bond prices moved to the upside early in the session and climbed somewhat more firmly into positive territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.6 basis points to 1.638 percent.

The ten-year yield added to the 4.8 basis point drop seen on Monday, continuing to give back ground after reaching its highest levels in over a year last week.

Treasuries continued to benefit from their appeal as a safe haven amid concerns about extended coronavirus lockdowns in Europe.

Reflecting worries a new wave of infections, German leaders agreed to extend the country’s lockdown until April 18.

Traders also kept an eye on Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen’s virtual testimony before the House Financial Services Committee.

In prepared remarks, Powell reiterated the Fed’s recent assessment that indicators of economic activity and employment have turned up recently.

Powell noted that the economic recovery is “far from complete,” however, and stressed the Fed will continue to provide the support that the economy needs for “as long as it takes.”

Treasuries saw continued strength after the Treasury Department revealed this month’s auction of $60 billion worth of two-year notes attracted average demand.

On the U.S. economic front, a report released by the Commerce Department showed a nosedive by U.S. new home sales in the month of February.

The Commerce Department said new home sales plummeted by 18.2 percent to an annual rate of 775,000 in February after jumping by 3.2 percent to an upwardly revised rate of 948,000 in January.

Economists had expected new home sales to tumble by 5.2 percent to a rate of 875,000 from the 923,000 originally reported for the previous month.

With the much bigger than expected decrease, new home sales plunged to their lowest rate since hitting 698,000 last May.

A report on durable goods may attract some attention on Wednesday along with Powell and Yellen’s second day of Congressional testimony.

Bond traders are also likely to keep an eye on the results of the Treasury Department’s auction of $61 billion worth of five-year notes.

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