Treasuries Extend Upward Trend Ahead Of Inflation Data

(RTTNews) - Treasuries showed a lack of direction early in the session on Tuesday but climbed firmly into positive territory over the course of the trading day.

Bond prices advanced as the morning advanced and remained firmly positive in afternoon trading. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.1 basis points to 3.646 percent.

With treasuries extending a recent upward trend, the ten-year yield closed lower for the sixth consecutive session, slumping to its lowest closing level in over a year.

The continued strength among treasuries reflected optimism about the outlook for interest rates ahead of the release of closely watched inflation data in the coming days.

The Labor Department is scheduled to release reports on consumer and producer price inflation in the month of August on Wednesday and Thursday, respectively.

The reports are expected to show slowdowns by the rates of consumer and producer price growth compared to the same month a year ago.

The data could impact the outlook for interest rates ahead of the Federal Reserve's monetary policy meeting next week.

The Fed is almost universally expected to begin lowering interest rates next week, but there is some debate about the size of the rate cut.

CME Group's FedWatch Tool is currently indicating a 67 percent chance the Fed will lower rates by 25 basis points and a 33 percent chance of a 50 basis point rate cut.

Trading on Wednesday is likely to be driven by reaction to the report on consumer price inflation and its impact on the outlook for interest rates.