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Treasuries Show Notable Move Back To The Downside

Following the rebound seen over the three previous sessions, treasuries moved back to the downside during trading on Tuesday.

Bond prices came under pressure in morning trading and remained firmly negative for the remainder of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed by 4.9 basis points to 2.908 percent.

Renewed interest rate concerns contributed to the pullback by treasuries, as traders kept a close eye on new Federal Reserve Chairman Jerome Powell's testimony before the House Financial Services Committee.

Powell's remarks before the committee were interpreted by some as indicating that the Fed may raise rates more than the three times currently anticipated.

In response to a question, Powell noted that incoming data has suggested a strengthening in the economy since the median forecast called for three rate hikes at the December meeting.

"We've seen some data that in my case will add some confidence to my view that inflation is moving up to target," Powell said. "We've also seen continued strength around the globe. And we've seen fiscal policy become more stimulative."

He added, "So, I think each of us is going to be taking the developments since the December meeting into account and writing down our new rate paths as we go into the March meeting."

The new Fed Chief stressed that he did not want to prejudge the new set of projections, but his comments still raised concerns about four rate increases this year.

In his prepared remarks, Powell reiterated the Fed's view that further gradual increases in interest rates will best promote attainment of both of the central bank's dual objectives.

Powell also said financial conditions remain accommodative despite recent volatility and highlighted strong consumer spending and job growth.

With the focus on Powell's congressional testimony, traders largely shrugged off a mixed batch of economic data.

While the Commerce Department released a report showing a bigger than expected drop in durable goods orders in January, the Conference Board's consumer confidence index jumped more than expected in February.

Economic news may attract attention on Wednesday, with traders likely to keep an eye on reports on fourth quarter GDP, pending home sales, and Chicago-area business activity.

by RTTNews Staff Writer

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