FX.co ★ Treasuries Give Back Ground Following Recent Strength

During Wednesday's trading, Treasuries exhibited a slight drop, settling back after a significant increase in the previous several sessions. Bond prices fell in the early trading period and held a losing position all day. Consequently, the yield on the benchmark ten-year note, which inversely correlates with its price, climbed by 2.9 basis points to 4.492 percent.

This minor withdrawal on the part of treasuries is partially attributed to profit-taking after a five-day bullish run, which brought the ten-year yield to its lowest point in almost a month. Treasuries were also affected by ongoing questions surrounding future interest rates, prompted by remarks made on Tuesday by Neel Kashkari, President of the Minneapolis Federal Reserve.

Kashkari hinted that interest rates might need to stay at their current levels for a prolonged period, noting that another rate increase couldn't be ruled out. Still, the Federal Reserve is broadly anticipated to reduce rates sometime in the third quarter. According to the CME Group's FedWatch Tool, there is currently an 83.5% probability that rates will decrease by September.

Bond prices continued to trail as a result of the Treasury Department's announcement about the upcoming auction of $42 billion worth of ten-year notes, which attracted only average demand. A high yield of 4.483 percent was registered in the auction of the ten-year note, with a bid-to-cover ratio of 2.49. The previous ten similar auctions had an average bid-to-cover ratio of 2.51, which is the measure of demand representing the volume of bids per dollar worth of securities on sale.

Market activity on Thursday might be influenced by the Labor Department's report on initial jobless claims for the week ending May 4th.