Treasuries Show Modest Move Back To The Downside

(RTTNews) - After trending higher over the past few sessions, treasuries gave back some ground during trading on Tuesday.

Bond prices recovered from an initial pullback but moved back to the downside as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up 1.0 basis points to 4.223 percent.

The pullback by treasuries came as traders continued to look ahead to the Federal Reserve's monetary policy decision on Wednesday.

The Fed is widely expected to leave interest rates unchanged, but the votes by specific officials and the accompanying statement could impact the outlook for interest rates.

CME Group's FedWatch Tool suggests investors expect the Fed to keep rates on hold until after Fed Chair Jerome Powell steps down in May.

Concerns new tariffs could lead to higher inflation may also have weighed on treasuries, as President Donald Trump said he is increasing tariffs on South Korea because of a delay in its legislature approving a trade deal with the U.S.

Trump said he is increasing tariffs on South Korean automobiles, lumber and pharmaceuticals and raising all other reciprocal tariffs from 15 percent to 25 percent.

The president also recently threatened to impose a 100 percent tariff on goods from Canada over a potential free trade deal with China.

Meanwhile, traders largely shrugged off a report from the Conference Board unexpectedly showing a significant deterioration in consumer confidence in the U.S. in the month of January.

Early trading activity may be somewhat subdued on Wednesday ahead of the Federal Reserve's monetary policy announcement later in the afternoon.