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Treasuries Close Slightly Higher After Seeing Initial Weakness

After initially moving to the downside, treasuries turned modestly higher over the course of the trading session on Tuesday.

Bond prices pulled back off their best levels of the day but still ended the day slightly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by nearly a basis point to 2.329 percent.

The turnaround by treasuries came following the release of a mixed batch of U.S. economic data along with continued turmoil in Washington.

The Commerce Department released a report this morning showing that housing starts unexpectedly saw further downside in the month of April.

The report said housing starts fell by 2.6 percent to an annual rate of 1.172 million in April after tumbling by 6.6 percent to a revised 1.203 million in March.

Economists had expected housing starts to climb to a rate of 1.260 million from the 1.215 million originally reported for the previous month.

Additionally, the Commerce Department said building permits slid by 2.5 percent to a rate of 1.229 million in April from 1.260 million in March.

Building permits, an indicator of future housing demand, had been expected to inch up to a rate of 1.270 million.

Meanwhile, a separate report from the Federal Reserve showed a much bigger than expected increase in industrial production in April.

The Fed said industrial production jumped by 1.0 percent in April after climbing by a downwardly revised 0.4 percent in March. Production rose for the third consecutive month and saw its largest monthly gain since February of 2014.

Economists had expected production to rise by 0.3 percent compared to the 0.5 percent increase originally reported for the previous month.

Traders also kept an eye on developments in Washington after a report from the Washington Post claimed President Donald Trump revealed highly classified information to Russian officials in a White House meeting last week.

Trump described the details of an Islamic State terrorist threat related to the use of laptop computers on aircraft, current and former U.S. officials told the Post.

Responding to the news in a post on Twitter, Trump said he has "the absolute right" to share details pertaining to terrorism and airline flight safety with Russia.

The news creates another headache for the White House, potentially threatening Trump's ability to make progress on issues such as tax reform and deregulation.

Any further developments in Washington may attract attention on Wednesday amid a quiet day on the U.S. economic front.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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