2024.03.1919:53:00UTC+00Treasuries Regain Ground Following Recent Downward Trend

Treasuries moved to the upside during trading on Tuesday, regaining ground following the downward trend seen over the past several sessions.

After an early advance, bond prices saw some further upside in afternoon trading, closing firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.3 basis points to 4.297 percent.

The ten-year yield moved lower for the first time in seven sessions, pulling back off its highest closing level in over three months.

The rebound by treasuries came as traders looked ahead to the Federal Reserve's highly anticipated monetary policy announcement on Wednesday.

While the Fed is widely expected to leave interest rates unchanged, the central bank's accompanying statement and economic projections could have a significant impact on the outlook for rates.

Recent hotter-than-expected inflation readings have reduced optimism about the likelihood of the Fed's first rate cut coming in June.

Bond prices saw continued strength in afternoon trading after the Treasury Department revealed this month's auction of $13 billion worth of twenty-year bonds attracted well above average demand.

The twenty-year bond auction drew a high yield of 4.542 percent and a bid-to-cover ratio of 2.79, while the ten previous twenty-year bond auctions had an average bid-to-cover ratio of 2.61.

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

On the U.S. economic front, a report released by the Commerce Department showed a substantial rebound in new residential construction in the U.S. in the month of February.

The Commerce Department said housing starts spiked by 10.7 percent to an annual rate of 1.521 million in February after plunging by 12.3 percent to a revised rate of 1.374 million in January.

Economists had expected housing starts to surge by 7.1 percent to a rate of 1.425 million from the 1.331 million originally reported for the previous month.

The report also said building permits shot up by 1.9 percent to an annual rate of 1.518 million in February after dipping by 0.3 percent to a revised rate of 1.489 million in January.

Building permits, an indicator of future housing demand, were expected to jump by 1.7 percent to a rate of 1.495 million from the 1.470 million originally reported for the previous month.