Treasuries Move Notably Higher Ahead Of Fed Announcement

Trading 29 avr 2020 Donner votre avis

Treasuries moved notably higher over the course of the trading day on Tuesday, largely offsetting the pullback seen in the previous session.

Bond prices moved steadily higher as the day progressed before giving back some ground going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.6 basis points to 0.610 percent.

The strength among treasuries came as traders looked ahead to the Federal Reserve's monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates unchanged at near-zero levels, although the central bank could provide additional guidance regarding how long it plans to keep rates at their current levels.

Some economists have also suggested the Fed could take steps toward yield curve control, announcing target asseted purchases as part of an effort to pin down longer-term yields.

Treasuries may also have benefited from the release of a report from the Conference Board showing consumer confidence deteriorated significantly in the month of April.

The Conference Board said its consumer confidence index plunged to 86.9 in April after tumbling to a downwardly revised 118.8 in March. Economists had expected the index to plummet to 90.0 from the 120.0 originally reported for the previous month.

Meanwhile, traders largely shrugged off the results of the Treasury Department's auction of $35 billion worth of seven-year notes, which attracted above average demand.

The seven-year note auction drew a high yield of 0.525 percent and a bid-to-cover ratio of 2.56, while the ten previous seven-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.

On Monday, the Treasury revealed its auctions of $42 billion worth of two-year notes and $43 billion worth of five-year notes also attracted stronger than average demand.

The Fed announcement is likely to be in the spotlight on Wednesday, but traders are also likely to keep an eye on the Commerce Department's preliminary report on first quarter GDP.


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