2014.04.2316:35:00UTC+00Treasuries Move Moderately Higher On Disappointing Housing Data

After closing nearly flat for two straight days, treasuries moved moderately higher over the course of the trading day on Wednesday.

Bond prices moved to the upside in morning trading and managed to remain firmly positive throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4 basis points to 2.686 percent.

The strength among treasuries was partly due to disappointing new home sales data, which increased the appeal of safe havens such as bonds.

A report from the Commerce Department showed that new home sales plunged 14.5 percent to an annual rate of 384,000 in March from the revised February rate of 449,000.

The steep drop came as a surprise to economists, who had expected new home sales to climb to a rate of 455,000 from the 440,000 originally reported for the previous month.

With the unexpected decrease, new home sales fell to their lowest level annual rate since hitting 373,000 in July of last year.

Peter Boockvar, managing director at the Lindsey Group, said, "A 384,000 sales pace is below the 1991 recession bottom of 401,000 for perspective with an obviously smaller U.S. population then."

Treasuries held on to their gains following the release of the results of the Treasury Department's auction of $35 billion worth of five-year notes.

The five-year note auction drew a high yield of 1.732 percent and a bid-to-cover ratio of 2.79, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.62.

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

"Following a mixed two-year auction yesterday where dealers got stuck with a lot of the paper, the five-year today was also mixed," Boockvar said. "The yield was above the when issued but the bid to cover was above the 12 month average."

Finishing off this week's series of long-term securities auctions, the Treasury is due to sell $29 billion worth of seven-year notes on Thursday.

Trading on Thursday may also be impacted by the release of a pair of key economic reports on durable goods orders and weekly jobless claims.