Despite some mid-day volatility, treasuries ended Monday's trading firmly in positive territory. The interest in government bonds came as investors took money out of risky investments such as stocks.
The Dow fell by more than 300 points, while strong demand for the Treasury's security auctions indicated the risk-averse mood of investors. Trader concern was driven by the prospect of a bankruptcy filing by General Motors(GM) or Chrysler.
After seeing some early strength, the benchmark ten-year note gave back some ground in late morning trading but moved back to the upside in the afternoon. Subsequently, the yield on the ten-year note closed down 4.7 basis points at 2.714 percent.
The U.S. Treasury Department completed its auction of 3 and 6-month bills Monday afternoon. The size of the weekly auctions has grown this year as the government continues to raise funds for its stimulus efforts.
The auction of $31 billion worth of 3-month bills drew a yield of 0.195 percent while posting strong demand, with the bid-to-cover ratio coming in at a level of 3.09.
At the same time, the government completed its sale of $29 billion worth of 6-month bills. The auction drew a yield of 0.420 percent while the bid-to-cover ratio came in at a level of 2.88.
Looking ahead, trading on Tuesday could be impacted by the release of the Conference Board's report on consumer confidence in the month of March.
Economists expect the consumer confidence index to come in at 28.0 for the month of March. February's reading was far lower than analysts had expected, falling to a record low level of 25.0.
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