Treasuries showed a strong move to the upside in early trading on Wednesday but gave back ground over the course of the session.<\/p>\n
Bond prices pulled back well off their early highs and briefly dipped into negative territory before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by less than a basis point to 3.976 percent.<\/p>\n
The pullback by treasuries partly reflected a negative reaction to the results of the Treasury Department’s auction of $32 billion worth of ten-year notes, which attracted below average demand.<\/p>\n
The ten-year note auction drew a high yield of 3.985 percent and a bid-to-cover ratio of 2.35, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.42.<\/p>\n
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.<\/p>\n
Traders also continued to express concerns about the outlook for interest rates as Federal Reserve Chair Jerome Powell spent his second day testifying on Capitol Hill.<\/p>\n
Powell reiterated his prepared remarks from yesterday, telling lawmakers the “ultimate level of interest rates is likely to be higher than previously anticipated.”<\/p>\n
He also said the Fed would be prepared to reaccelerate the pace of rate hikes if the totality of incoming data were to indicate that faster tightening is warranted.<\/p>\n
Traders may also have been reluctant to make significant moves ahead of the release of the closely watched monthly jobs report on Friday.<\/p>\n
Economists currently expect employment to jump by 203,000 jobs in February after surging by 517,000 jobs in January, while the unemployment rate is expected to hold at 3.4 percent.<\/p>\n
The jobs data could have a significant impact on the outlook for interest rates, as the Fed has warned about labor market tightness.<\/p>\n
Looking ahead, a report on weekly jobless claims may attract attention on Thursday, although trading activity may remain subdued ahead of Friday’s monthly jobs report. <\/p>\n