2019.09.1015:21:00UTC+00Treasuries Show Another Significant Move To The Downside

Treasuries moved significantly lower over the course of the trading session on Tuesday, extending the notable downward move seen on Monday.

Bond prices moved steadily lower as the day progressed before closing firmly in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8 basis points to 1.702 percent.

The ten-year yield added to the 7.2 basis point advance seen in the previous session, ending the day at its highest closing level in a month.

The sustained weakness among treasuries came as traders continued to express optimism about more global stimulus and upcoming U.S.-China trade talks.

Treasuries saw further downside after a report from the South China Morning Post said China is expected to agree to buy more American agricultural products in hopes of a better trade deal.

A source familiar with the situation told the SCMP working-level officials are discussing the text of a deal that would be reviewed at the high-level meeting scheduled for next month.

However, Scott Kennedy, senior adviser with the Washington-based Centre for Strategic and International Studies, warned that a deal on soybeans won't dispel distrust between Beijing and Washington.

The results of the Treasury Department's auction of $38 billion worth of three-year notes also weighed on treasuries, as the auction attracted below average demand.

The three-year note auction drew a high yield of 1.573 percent and a bid-to-cover ratio of 2.42, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.50.

On Wednesday, the Treasury Department is due to announce the results of its auctions of $24 billion worth of ten-year notes.

Trading on Wednesday may also be impacted by reaction to the Labor Department's report on producer price inflation in the month of August.