Treasuries moved modestly lower over the course of the trading session on Tuesday, extending the downward move seen in the previous session.
Bond prices fluctuated as the trading progressed before closing in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.3 basis points to 2.873 percent.
The modestly lower close by treasuries came after the Treasury Department’s auction of $33 billion worth of three-year notes attracted below average demand.
The three-year note auction drew a high yield of 2.685 percent and a bid-to-cover ratio of 2.51, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.90.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Continued strength on Wall Street may also have weighed on treasuries, as optimism about the upcoming earnings season overshadowed recent trade concerns.
Snack food and beverage giant PepsiCo (PEP) released its second quarter results before the start of trading, reporting earnings that exceeded analyst estimates.
Following a couple of quiet days on the U.S. economic front, trading on Wednesday may be impacted by reaction to a report on producer prices in the month of June.
Bond traders are also likely to keep an eye on the results of the Treasury Department’s auction of $22 billion worth of ten-year notes.