2019.12.2319:20:00UTC+00Treasuries Close Modestly Lower Following Lackluster Session

Treasuries showed a lack of direction over the course of the trading session on Monday before eventually ending the day modestly lower.

After spending the morning lingering near the unchanged line, bond prices slid more firmly into negative territory in afternoon trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.8 basis points to 1.935 percent.

The lower close by treasuries came after the Treasury Department revealed that its auction of $40 billion worth of two-year notes attracted well below average demand.

The two-year note auction drew a high yield of 1.653 percent and a bid-to-cover ratio of 2.30, while the en previous two-year note auctions had an average bid-to-cover ratio of 2.60.

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

Meanwhile, traders largely shrugged off a report from the Commerce Department showing an unexpected slump in durable goods orders, as the data comes from before the U.S. and China reached an agreement on a phase one trade deal.

The report said durable goods orders plunged by 2.0 percent in November after edging up by a downwardly revised 0.2 percent in October.

The sharp decline came as a surprise to economists, who had expected durable goods orders to jump by 1.5 percent compared to the 0.5 percent increase that had been reported for the previous month.

Excluding a nosedive in orders for transportation equipment, durable goods orders came in unchanged in November after rising by 0.3 percent in October. Economists had expected ex-transportation orders to tick up by 0.2 percent.

A separate report released by the Commerce Department showed a significant increase in U.S. new home sales in the month of November.

The Commerce Department said new home sales jumped by 1.3 percent to an annual rate of 719,000 after plunging by 2.7 percent to a revised rate of 710,000 in October.

Economists had expected new home sales to inch up by 0.1 percent to 734,000 from the 733,000 originally reported for the previous month.

Looking ahead, the Treasury is due to announce the results of its auctions of $41 billion worth of five-year notes on Tuesday, although trading activity is likely to be subdued ahead of the Christmas holiday.