Treasuries Come Under Pressure Amid Easing Geopolitical Concerns

Following the pullback seen in the previous session, treasuries saw further downside during the trading day on Tuesday.

Bond prices came under pressure early in the day and remained firmly negative throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.9 basis points to 2.045 percent.

The ten-year yield added to the 4.1 basis points increase seen on Monday, reaching its highest closing level since late July of 2019.

Easing geopolitical concerns reduced the safe haven appeal of bonds following news Russia is pulling back some troops from the Ukrainian border.

Russian Defense Ministry spokesman Igor Konashenkov said units from Russia’s southern and western military districts, which border Ukraine, have already begun returning to their bases after completing combat training.

The news has helped ease concerns about a Russian invasion of Ukraine, which members of the Biden administration recently warned could be imminent.

Concerns about the outlook for interest rates may also have weighed on treasuries after report from the Labor Department showing U.S. producer prices jumped by much more than expected in the month of January.

The Labor Department said its producer price index for final demand surged up by 1.0 percent in January after rising by an upwardly revised 0.4 percent in December.

Economists had expected producer prices to increase by 0.5 percent compared to the 0.2 percent uptick originally reported for the previous month.

Excluding prices for food, energy and trade services, core producer prices advanced by 0.9 percent in January after climbing by 0.4 percent in December.

At the same time, the Labor Department said the annual rate of producer price growth slowed to 9.7 percent in January from 9.8 percent in December. Economists had expected the yearly growth to slow to 9.1 percent.

The annual rate of growth in core producer prices also decelerated to 6.9 percent in January from 7.0 percent in December.

Reports on retail sales, industrial production and homebuilder confidence may attract attention on Wednesday along with the minutes of the latest Federal Reserve meeting.

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