Treasuries Move To The Downside Amid Lingering Interest Rate Worries

After ending the previous session modestly lower, treasuries saw further downside over the course of the trading day on Tuesday.

Bond prices fluctuated in morning trading but slid firmly back into the red as the afternoon progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.5 basis points to 3.748 percent.

The weakness among treasuries came amid lingering concerns about the outlook for interest rates following hawkish comments from some Federal Reserve officials.

Traders may also have moved money out of bonds in anticipation of remarks by Federal Reserve Chair Jerome Powell on Wednesday.

Renewed optimism about easing Covid restrictions in China may also have reduced the safe haven appeal of bonds, as mainland China reported the first decrease in new Covid infections in more than a week on Monday.

Chinese health officials also released a plan to boost vaccinations for elderly people and said they are “closely watching” the virus as it evolves and mutates.

The officials defended China’s zero-Covid policy at a press briefing on Tuesday but said lockdowns would be lifted “as quickly as possible.”

However, traders previously saw their hopes for an easing of Covid restrictions in China dashed by the recent surge in new cases.

In U.S. economic news, the Conference Board released a report this morning showing a modest decrease in U.S. consumer confidence in the month of November.

The Conference Board said its consumer confidence index dipped to 100.2 in November from a revised 102.2 in October. Economists had expected the index to slip to 100.0 from the 102.5 originally reported for the previous month.

Powell’s speech is likely to be in the spotlight on Wednesday, although traders are also likely to keep an eye on reports on private sector employment, job openings and pending home sales as well as the Fed’s Beige Book.

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