Treasuries Close Nearly Flat Despite Early Rally

(RTTNews) - After moving sharply higher in early trading on Tuesday, treasuries gave back ground over the course of the trading session to the end the day roughly flat.

Bond prices pulled back well off their early highs before finishing the session near the unchanged line. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.825 percent after hitting a low of 1.75 percent.

The initial strength among treasuries was partly due to the release of a report from the Commerce Department showing a substantial decrease in durable goods orders in the month of December.

The report said durable goods orders tumbled by 3.4 percent in December following a revised 2.1 percent decrease in November.

Economists had expected durable goods orders to increase by 0.5 percent compared to the 0.7 percent drop originally reported for the previous month.

Excluding a sharp drop in orders for transportation equipment, durable goods orders fell by a more modest 0.8 percent in December compared to a 1.3 percent decrease in November.

Buying interest waned over the course of the morning, however, and traders subsequently looked to cash in on the early strength.

The pullback came as traders were looking ahead to the Federal Reserve's monetary policy announcement due Wednesday afternoon.

While the Fed is widely expected to leave interest rates unchanged, traders are likely to keep a close eye on any changes to the accompanying statement.

A pair of upbeat reports on new home sales and consumer confidence may also have helped to offset the economic concerns raised by the disappointing durable goods data.

The Commerce Department released a report showing that new home sales jumped to their highest annual rate in over six years in December, while the Conference Board said its consumer confidence index surged up to a seven-year high in January.

The Fed statement is likely to be in the spotlight on Wednesday amid a lack of major U.S. economic data on the day.