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Treasuries Extend Yesterday's Move To The Upside

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

Bond prices climbed firmly into positive territory, extending the upward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.2 basis points to 1.786 percent.

The continued advance by treasuries came amid some uncertainty about the prospects of the U.S. and China finalizing a phase one trade deal.

Treasuries remained positive in afternoon trading as President Donald Trump threatened higher tariffs on Chinese goods if an agreement is not reached.

"If we don't make a deal with China, I'll just raise the tariffs even higher," Trump said during a cabinet meeting at the White House.

In U.S. economic news, the Commerce Department released a report before the start of trading showing a substantial rebound in new residential construction in the month of October.

The Commerce Department said housing starts surged up by 3.8 percent to an annual rate of 1.314 million in October after plunging by 7.9 percent to a revised rate of 1.266 million in September.

Economists had expected housing starts to jump by 5.1 percent to a rate of 1.320 million from the 1.256 million originally reported for the previous month.

The report also said building permits spiked by 5.0 percent to an annual rate of 1.461 million in October after tumbling by 2.4 percent to a revised rate of 1.391 million in September.

Building permits, an indicator of future housing demand, had been expected to edge down by 0.1 percent to a rate of 1.385 million from the 1.387 million originally reported for the previous month.

The minutes of the minutes of the Federal Reserve's latest monetary policy meeting may attract some attention on Wednesday, although the minutes are likely to reinforce the view that interest rates will be kept on hold for the near future.

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