Treasuries Show Significant Recovery Attempt After Early Pullback

(RTTNews) - Following the rebound seen in the previous session, treasuries initially showed a significant move back to the downside on Wednesday but staged a recovery over the course of the day.

Bond prices have climbed well off their early lows and back near the unchanged line. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, has risen 1.5 basis points to 5.286 percent.

Earlier in the day, the ten-year yield surged as high as 5.365 percent, marking its highest level in over twenty-four years.

The recovery attempt by treasuries came after the Treasury Department revealed this month's auction of $39 billion worth of ten-year notes attracted well above average demand.

The ten-year note auction drew a high yield of 5.300 percent and a bid-to-cover ratio of 2.77, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.52.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Treasuries also benefitted from a substantial downturn by the price of crude oil, with U.S. crude oil futures falling by 0.7 percent after jumping as much as 1.7 percent.

Meanwhile, the bond market did not show much reaction to the minutes of the Federal Reserve's latest monetary policy meeting, which confirmed most officials expect to once again raise interest rates before the end of the year.

The Fed said, "Most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end."

However, the minutes did not provide further insight about the timing of the rate hike and said officials emphasized "that they approached each meeting with an open mind and decisions at future meetings would depend on incoming information and its implications for the outlook and the balance of risks."