Treasuries moved to the downside over the course of the trading on Monday, as investors considered supply factors in the bond market amid record sales of government-backed debt.
With no significant news on tap for the day, traders focused on upcoming auctions of long-term securities, including Tuesday's sale of the ten-year TIPS note, along with the standard ten and three-year notes up for sale later in the week.
After seeing some strength early on amid a sell-off on Wall Street, the benchmark ten-year note steadily ceded ground, moving into negative territory in the afternoon. The yield on the note closed at 2.941 percent, an increase of 3.4 basis points on the day.
Tuesday afternoon, the Treasury Department plans to sell $6.0 billion of 10-year inflation immune treasuries, also called TIPS.
The previous auction was for $8.0 billion worth of the security, drawing a yield of 2.245 percent while attracting strong demand, with the bid-to-cover ratio coming in at 2.48.
The results of the ten-year TIPS auction will be compared to the outcome of the regular ten-year note sale later in the week, with the spread indicative of near-term inflation.
Also on Tuesday, the government will auction $25.0 billion in 52-week bills, set to mature April 8th, 2009.
The previous auction for comparable securities took place early last month, when the Treasury sold $24.0 billion worth of the securities. The auction drew a yield of 0.7 percent, while attracting unusually strong demand, with the bid-to-cover ratio coming in at 3.51.
The Treasury Department also revealed that it plans to sell $18.0 billion worth of ten-year notes on Thursday. Traders will be focused on the results of the sale, as the ten-year note is known as a benchmark security in the bond market.
The previous auction took place early last month, when the Treasury sold $18.0 billion worth of the ten-year security. The auction posted a high yield of 3.681 percent, while drawing modest demand, with the bid-to-cover ratio coming in at a level of 2.14.
Combined with a recent resurgence in risk appetite and raised supply concerns, the treasury market has seen substantial selling pressure in recent sessions.
For comments and feedback: contact email@example.com