Treasuries Close Roughly Flat After Seeing Early Strength

After moving to the upside early in the session, treasuries gave back ground over the course of the trading day on Tuesday.

Bond prices pulled back well off their early highs, ending the day roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed unchanged at 1.481 percent after hitting a low of 1.455 percent.

The flat close by treasuries came amid easing concerns about the impact of the Omicron variant of the coronavirus.

Helping offset worries about the pandemic, the Centers for Disease Control and Prevention has shortened the recommended isolation time to for asymptomatic people with Covid-19 to 5 days from 10 days.

The CDC said the change is motivated by science demonstrating that the majority of Covid transmission occurs early in the course of illness, generally in the 1-2 days prior to onset of symptoms and the 2-3 days after.

“Therefore, people who test positive should isolate for 5 days and, if asymptomatic at that time, they may leave isolation if they can continue to mask for 5 days to minimize the risk of infecting others,” the CDC said.

A new study from South Africa also indicated that those infected with the Omicron variant have increased immune protection against the delta strain.

Meanwhile, the Treasury Department revealed that this month’s auction of $57 billion worth of five-year notes attracted slightly above average demand.

The five-year note auction drew a high yield of 1.263 percent and a bid-to-cover ratio of 2.4, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.37.

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

Looking ahead, the Treasury is scheduled to announce the results of this month’s auction of $56 billion worth of seven-year notes on Wednesday.

Trading on Wednesday may also be impacted by reaction to reports on the U.S. goods trade deficit and pending home sales.

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