2021.02.2419:11:00UTC+00Treasuries Climb Off Worst Levels But Still Close Lower

After coming under pressure early in the session, treasuries regained some ground over the course of the trading day on Wednesday.

Bond prices climbed well off their worst levels of the day but still closed in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.7 basis points to 1.389 percent.

The ten-year yield pulled back off the one-year intraday high of 1.435 percent hit in early trading but still finished the day at its highest closing level in a year.

The yield on the thirty-year bond also ended the session at its highest closing level since the early days of the coronavirus pandemic.

Treasuries climbed off their worst levels after Federal Reserve Chair Jerome Powell once again reiterated that the Fed is likely to maintain its ultra-easy monetary policy for the foreseeable future.

Powell testified before House Financial Services Committee, with his prepared remarks mirroring those he delivered before the Senate Banking Committee on Tuesday.

The lower close by treasuries came despite Powell's assurances and the Fed's seeming lack of concern about the outlook for inflation.

Data released by the Commerce Department showing a much bigger than expected jump in new home sales in the month of January may have reduced the appeal of bonds.

The Commerce Department said new home sales spiked by 4.3 percent to an annual rate of 923,000 in January after soaring by 5.5 percent to a revised rate of 885,000 in December.

Economists had expected new home sales to surge up by 1.5 percent to a rate of 855,000 from the 842,000 originally reported for the previous month.

The Treasury Department also revealed this month's auction of $61 billion worth of five-year notes attracted below average demand.

The five-year note auction drew a high yield of 0.621 percent and a bid-to-cover ratio of 2.24, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.46.

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

Looking ahead, the Treasury is due to announce the result of its auction of $62 billion worth of seven-year notes on Thursday.

A batch of economic day may also attract attention on Thursday, with traders likely to keep an eye on reports on initial jobless claims, durable goods orders and pending home sales.