2024.02.2119:26:00UTC+00Treasuries Come Under Pressure On Disappointing Bond Auction, Fed Minutes

After showing a lack of direction early in the session on Wednesday, treasuries came under pressure over the course of the trading day.

Bond prices slid more firmly into negative territory after spending early trading lingering near the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.0 basis points to 4.325 percent.

With the increase on the day, the ten-year yield climbed to its highest closing level since late November.

Treasuries started drifting lower in late-morning trading and showed a notable move to the downside after the Treasury Department revealed this month's auction of $16 billion worth of twenty-year bonds attracted well below average demand.

The twenty-year bond auction drew a high yield of 4.595 percent and a bid-to-cover ratio of 2.39, while the ten previous twenty-year bond auctions had an average bid-to-cover ratio of 2.63.

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

Treasuries saw continued weakness following the release of the minutes of the Federal Reserve's monetary policy meeting, which revealed most officials remain wary of cutting interest rates "too quickly."

The minutes of the late-January meeting said participants acknowledged risks to achieving the Fed's employment and inflation goals were moving into better balance, but they remained highly attentive to inflation risks.

"In particular, they saw upside risks to inflation as having diminished but noted that inflation was still above the Committee's longer-run goal," the Fed said.

Most participants subsequently highlighted the risks of moving "too quickly" to lower interest rates and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to the Fed's 2 percent target.

However, the Fed said a couple of participants pointed to downside risks to the economy associated with maintaining an overly restrictive stance for too long.

While trading on Thursday may continue to be impacted by reaction to the Fed minutes, reports on initial jobless claims and existing home sales are also likely to attract attention.