Treasuries Extend Yesterday’s Pullback Amid Rally On Wall Street

Treasuries came under pressure over the course of the trading day on Tuesday, extending the sharp pullback seen in the previous session.

Bond prices moved modestly lower early in the session and saw further downside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.6 basis points to 1.480 percent.

The ten-year yield added to the 9.1 basis point jump seen on Monday, climbing further off the more than two-month closing low set last Friday.

The continued weakness among treasuries came as stocks on Wall Street extended yesterday’s rally amid easing concerns about the impact of the Omicron variant of the coronavirus.

Indications the variant causes milder symptoms has helped offset worries the new strain could derail the global economic recovery.

In U.S. economic news, the Commerce Department released a report showing the U.S. trade deficit narrowed significantly in the month of October amid a spike in the value of exports.

The report said the trade deficit decreased to $67.1 billion in October from a revised $81.4 billion in September. Economists had expected the deficit to narrow to $67.5 billion from the $80.9 billion originally reported for the previous month.

The narrower trade deficit came as the value of exports soared by 8.1 percent to $223.6 billion, while the value of imports climbed by 0.9 percent to $290.7 billion.

Meanwhile, traders largely shrugged off the results of this month’s auction of $54 billion worth of three-year notes, which attracted average demand.

The three-year note auction drew a high yield of 1.000 percent and a bid-to-cover ratio of 2.43, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.44.

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 this month’s auction of $ 36 billion worth of ten-year notes and $22 billion worth of thirty-year bonds on Wednesday and Thursday, respectively.

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