Treasuries Move Back To The Downside Amid Economic Optimism

(RTTNews) - Treasuries showed a notable move to the downside during trading on Tuesday, more than offsetting the strength that was seen in the previous session.

Bond prices moved steadily lower throughout much of the session before closing firmly in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 5 basis points to 3.026 percent.

With the increase on the day, the ten-year yield offset the loss posted on Monday to reach its highest closing level in well over two years.

The weakness among treasuries partly reflected optimism about the outlook for the economy, which contributed to expectations that the Federal Reserve will continue to scale back its asset purchase program in the New Year.

Adding to the economic optimism, the Conference Board released a report showing a bigger than expected rebound by consumer confidence.

The Conference Board said its consumer confidence index jumped to 78.1 in December from 72.0 in November. Economists had expected the index to climb to 76.8 from the 70.4 originally reported for the previous month.

Lynn Franco, Director of Economic Indicators at the Conference Board, noted that the rebounded lifted the index back near pre-government shutdown levels. The index came in at 80.2 in September.

A separate report from Standard & Poor's showed that home prices rose at the fastest annual rate in over seven years in October, while MNI Indicators released a report showing a bigger than expected slowdown in the pace of growth in Chicago-area business activity in December.

However, the extent of the pullback by treasuries may have been exaggerated by below average volume, with many traders on the sidelines ahead of the New Year's Day holiday on Wednesday.

Following the holiday, trading on Thursday could be impacted by the release of reports on weekly jobless claims, manufacturing activity, and construction spending.