Treasuries Regain Ground As Traders Await Election Results

Treasuries showed a strong move to the upside during trading on Tuesday, regaining ground after trending lower over the past few sessions.

Bond prices moved higher early in the session and climbed 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 8.8 basis points to 4.126 percent.

The rebound by treasuries came as traders awaited the outcome of today’s U.S. midterm elections, which will determine control of Congress.

Republicans are expected to take control of the House and possibly the Senate, although the final results may not be known for days or even weeks.

Traders also continued to look ahead to Thursday’s report on consumer price inflation, as the data could have a significant impact on the outlook for interest rates.

Economists expect a modest slowdown in the annual rate of consumer price growth, which could add to optimism about a slowdown in the pace of rate hikes.

Meanwhile, the Treasury Department revealed this month’s auction of $40 billion worth of three-year notes attracted above average demand.

The three-year note auction drew a high yield of 4.605 percent and a bid-to-cover ratio of 2.57, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.48.

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 Wednesday may be impacted by reaction to the elections results, while bond traders are also likely to keep an eye on the results of the Treasury’s auction of $35 billion worth of ten-year notes.

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