Treasuries Give Back Ground Following Recent Strength

After moving sharply higher over the past few sessions, treasuries gave back some ground during the trading day on Tuesday.

Bond prices moved to the downside in morning trading and remained firmly negative throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 3.6 basis points to 1.641 percent.

The ten-year yield rebounded after ending the previous session at its lowest closing level in well over three months.

The pullback by treasuries came as traders cashed in on the recent strength in the bond markets, which was sparked by treasuries’ safe haven appeal amid the coronavirus outbreak.

Treasuries saw further downside following the release of a report from the Conference Board showing a notable improvement in U.S. consumer confidence in the month of January.

The Conference Board said its consumer confidence index climbed to 131.6 in January from an upwardly revised 128.2 in December.

Economists had expected the consumer confidence index to rise to 127.8 from the 126.5 originally reported for the previous month.

“Consumer confidence increased in January, following a moderate advance in December, driven primarily by a more positive assessment of the current job market and increased optimism about future job prospects,” said Lynn Franco, Senior Director, Economic Indicators, at The Conference Board.

She added, “Optimism about the labor market should continue to support confidence in the short-term and, as a result, consumers will continue driving growth and prevent the economy from slowing in early 2020.”

Earlier in the day, the Commerce Department released a separate report showing new orders for U.S. manufactured durable goods rebounded by much more than anticipated in the month of December.

The report said durable goods orders surged up by 2.4 percent in December after tumbling by a revised 3.1 percent in November. Economists had expected durable goods orders to rise by 0.5 percent.

Orders for transportation equipment led the rebound, spiking by 7.6 percent in December after plunging by 8.3 percent in November.

Excluding orders for transportation equipment, durable goods orders edged down by 0.1 percent in December after falling by 0.4 percent in November. Economists had expected a 0.2 percent uptick.

Treasuries remained stuck in the red after the Treasury Department revealed its auction of $32 billion worth of seven-year notes attracted modestly below average demand.

Looking ahead, the Federal Reserve is due to announce its latest monetary policy decision on Wednesday, although the central bank is widely expected to leave interest rates unchanged.

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