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Treasuries Show Modest Move Back To The Upside

After moving modestly lower over the course of the previous session, treasuries moved back to the upside during trading on Tuesday.

Bond prices pulled back off their best levels going into the close but remained in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.7 basis points to 3.055 percent.

The rebound by treasuries came amid renewed skepticism about a trade deal between the U.S. and China following President Donald Trump's comments in an interview with the Wall Street Journal.

In the interview published Monday, Trump told the Journal it was "highly unlikely" he would delay an increase in tariffs on $200 billion worth of Chinese goods from 10 percent to 25 percent.

Trump also suggested the U.S. could slap 10 percent tariffs on iPhones and laptops imported from China, contributing to an early sell-off by shares of Apple (AAPL).

The comments from Trump came just days before he is due to meet with Chinese President Xi Jinping at a G20 summit in Argentina later this week.

Trump has previously argued his tough talk on trade has actually helped the U.S. to make deals, including the new trade agreement between the U.S., Mexico, and Canada.

On the U.S. economic front, the Conference Board released a report showing a bigger than expected decrease in consumer confidence in the month of November.

The Conference Board said its consumer confidence index dropped to 135.7 in November after rising to 137.9 in October. Economists had expected the index to dip to 136.5.

The bigger than expected decrease by the consumer confidence index came after it reached its highest level since September of 2000 in the previous month.

Treasuries reached new highs for the session following the release of the results of the Treasury Department's auction of $40 billion worth of five-year notes, which attracted average demand.

The five-year note auction drew a high yield of 2.880 percent and a bid-to-cover ratio of 2.49, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.46.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

On Wednesday, the Treasury is due to finish off this week's series of long-term securities auctions with the sale of $32 billion worth of seven-year notes.

Trading on Wednesday may also be impacted by reaction to a revised reading on third quarter GDP as well as a report on new home sales in October.

Additionally, Federal Reserve Chairman Jerome Powell is scheduled to deliver a speech on "The Federal Reserve's Framework for Monitoring Financial Stability" at the Economic Club of New York.

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