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Treasuries Show Modest Move Back To The Downside

After initially showing a lack of direction, treasuries moved modestly lower over the course of the trading session on Tuesday.

Bond prices moved to the downside in mid-morning trading and remained in the red throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.4 basis points to 2.419 percent.

With the increase on the day, the ten-year yield rebounded after ending the previous session at its lowest closing level in well over a month.

The pullback by treasuries came as traders cashed in on the strength seen in recent sessions amid the escalating trade dispute between the U.S. and China.

Despite the retaliatory tariffs announced by China on Monday, traders generally remain optimistic the U.S. and China will eventually reach a trade deal.

President Donald Trump has continued to express confidence the Chinese will yield to U.S. demands, claiming a trade agreement was 95 percent complete before China reneged.

Trump has repeatedly argued that the U.S. is in a stronger position than China in the negotiations, citing the recent strength of the U.S. economy.

"If you looked at the first quarter — which is always, historically, the worst quarter — we were at 3.2 percent. People were very surprised," Trump told reporters on Monday.

"Well, a lot of that was the tariffs that we were taking in from China," he added. "So we're in a very good position and I think it's only going to get better."

Trump also indicated that he would be meeting with Chinese President Xi Jinping at the G20 Summit in Japan late next month.

"We have a very good relationship. Maybe something will happen," Trump said. "But we're going to be meeting, as you know, at the G20 in Japan. And that will be, I think, probably, a very fruitful meeting."

Economic news may move back into the spotlight on Wednesday, with traders likely to keep a close eye on reports on retail sales, industrial production, and homebuilder confidence.

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