Treasuries Move Sharply Lower Ahead Of Key Economic Data

After ending the previous session little changed, treasuries moved sharply lower over the course of the trading day on Wednesday.

Bond prices came under pressure in early trading and saw further downside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, surged 11.3 basis points to 4.593 percent.

The sell-off by treasuries came as traders looked ahead to the release of key economic data in the coming days, including a preliminary reading on third quarter GDP due to be released on Thursday.

Economists expect the pace of GDP to show a significant acceleration to 4.2 percent in the third quarter from 2.1 percent in the second quarter.

Reports on weekly jobless claims, durable goods orders and pending home sales may also attract attention on Thursday, as traders look for additional clues about the outlook for interest rates.

On Friday, the Commerce Department is due to release a report on personal income and spending that includes readings on inflation said to be preferred by the Federal Reserve

Treasuries saw further downside after the Commerce Department released a report showing a substantial rebound in new home sales in the month of September.

The Commerce Department said new home sales soared by 12.3 percent to an annual rate of 759,000 in September after plunging by 8.2 percent to a revised rate of 676,000 in August.

Economists had expected new home sales to climb by 0.7 percent to an annual rate of 680,000 from the 675,000 originally reported for the previous month.

With the much bigger than expected increase, new home sales reached their highest annual rate since hitting 773,000 in February 2022.

The weakness persisted as the Treasury Department revealed this month’s auction of $52 billion worth of five-year notes attracted below average demand.

The five-year note auction drew a high yield of 4.899 percent and a bid-to-cover ratio of 2.36, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.54.

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

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