Treasuries Close Higher After Recovering From Initial Weakness

(RTTNews) - After seeing initial weakness, treasuries turned higher over the course of the trading day on Tuesday, offsetting the drop seen in the previous session.

Bond prices moved roughly sideways going into the close, hovering in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.2 basis points to 2.34 percent.

The rebound by treasuries may partly have reflected the weakness that emerged on Wall Street, with the Dow tumbling by more than 200 points on the day.

A negative reaction to quarterly results from United Technologies (UTX), IBM (IBM), and Verizon (VZ) weighed on the blue chip index.

Nonetheless, trading activity remained relatively subdued amid another quiet day on the U.S. economic front.

The economic calendar will pick up somewhat in the coming days with the release of reports on weekly jobless claims and new and existing home sales.

Traders may also be looking ahead to next week's Federal Reserve meeting, as the central bank is due to announce its latest monetary decision next Wednesday.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "We don't anticipate any major changes from the Fed at next week's FOMC meeting."

"With the Fed keen to stress that every meeting is 'live' and that decisions are based entirely on the incoming data, we wouldn't expect any heavy hints that a September rate hike is coming, even though that is by far the most likely lift-off date," he added.

Following the lack of major U.S. economic data over the past two days, trading on Wednesday could be impacted by a report on existing home sales.

Economists expect existing home sales to edge up to an annual rate of 5.40 million in June from 5.35 million in May.