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Treasuries Show Notable Rebound Ahead Of Inflation Data


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Following the sharp pullback seen in the previous session, treasuries showed a notable move back to the upside during trading on Wednesday.

Bond prices moved notably higher in early trading and saw continued strength late in the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 6.7 basis points to 3.554 percent.

With the decrease on the day, the ten-year yield partly offset the 10.1 basis points surge seen during trading on Tuesday.

The rebound by treasuries partly reflected optimism about the highly anticipated consumer price inflation report due to be released on Thursday.

The report is expected to show a slowdown in the annual rate of consumer price growth and could have a significant impact on the outlook for interest rates.

Treasuries saw further upside after the Treasury Department revealed this month’s auction of $32 billion worth of ten-year notes attracted above average demand.

The ten-year note auction drew a high yield of 3.575 percent and a bid-to-cover ratio of 2.53, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.39.

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

The Labor Department’s report on consumer price inflation is likely to be in the spotlight on Thursday, overshadowing a separate report on weekly jobless claims.

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