Ten-Year Yield Drops To Nearly One-Month Closing Low

(RTTNews) - Extending the upward trend seen over the past several sessions, treasuries saw some strength during trading on Monday.

Bond prices gave back ground an early advance but moved to the upside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell 2.5 basis points to 4.038 percent.

The ten-year yield closed lower for the fifth time in the past six sessions, dropping to its lowest closing level in almost a month.

Treasuries continued to benefit from renewed optimism about the outlook for interest rates following the latest comments from Federal Reserve officials.

In an interview with Fox Business this morning, Fed Governor Christopher Waller indicates he supports cutting rates by another quarter point in December.

Waller's comments come following dovish remarks by New York Federal Reserve President John Williams last Friday, when he said he sees "room for a further adjustment" to rates in the near term.

CME Group's FedWatch Tool currently indicates an 80.9 percent chance the Fed will cut rates by a quarter point next month, up sharply from 42.4 percent a week.

Treasuries saw continued strength in afternoon trading after the Treasury Department revealed this month's auction of $69 billion worth of two-year notes attracted modestly above average demand.

The two-year note auction drew a high yield of 3.489 percent and a bid-to-cover ratio of 2.68, while the ten previous two-year note auctions had an average bid-to-cover ratio of 2.60.

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

Trading on Tuesday may be impacted by reaction to long-delayed reports on retail sales and producer prices in September as well as a reading on consumer confidence in November.