After moving notably higher over the course of the previous sessions, treasuries gave back some ground during trading on Tuesday but closed well off their worst levels.
Bond prices rebounded after coming under pressure in early trading but still ended the day modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 2 basis points to 1.628 percent after reaching a high of 1.652 percent.
The early weakness among treasuries came as some traders moved their money out of bonds and into stocks following the sell-off that was seen on Wall Street on Monday.
Another relatively upbeat housing report also generated some selling pressure, with a report Standard & Poor's showing a bigger than expected increase in home prices in April.
The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index rose by a seasonally adjusted 0.7 percent in April, matching the upwardly revised increase in March. Economists had expected home prices to increase by 0.4 percent.
The upbeat home price report came on the heels of the release of Monday's Commerce Department report showing stronger than expected new home sales growth in May.
However, treasuries bounced well off their lows following the release of a report from the Conference Board showing a continued deterioration in consumer confidence in the month of June.
The Conference Board said its consumer confidence index dropped to 62.0 in June from a downwardly revised 64.4 in May. Economists had expected the index to slip to 63.5 from the 64.9 originally reported for the previous month.
Rob Carnell, chief international economist at ING, noted that there is "some evidence that the looming fiscal cliff is beginning to weigh on household sentiment."
Meanwhile, traders largely shrugged off the release of the results of the Treasury Department's auction of $35 billion worth of two-year notes.
The two-year note auction drew a high yield of 0.313 percent and a bid-to-cover ratio of 3.62, while the ten previous auctions had an average bid-to-cover ratio of 3.71.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Economic data may attract some attention on Wednesday, with traders likely to keep an eye on reports on durable goods orders and pending home sales.
Bond trading could also be impacted by the release of the results of the Treasury's auction of $35 billion worth of five-year notes.
by RTT Staff Writer
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