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Treasuries Pull Back Sharply, Lifting 10-Year Yield Back Near 1%

Treasuries showed a substantial move back to the downside during trading on Tuesday, more than offsetting the rebound seen in the previous session.

Bond prices came under pressure early in the session and saw further downside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, spiked by 26.9 basis points to 0.997 percent.

The sharp pullback by treasuries came as stocks on Wall Street rebounded following the biggest percentage drop by the Dow in over thirty years.

Stocks benefited from bargain hunting as well as President Donald Trump's pledge to support industries that have been hit particularly hard by the coronavirus outbreak, such as airlines.

"The United States will be powerfully supporting those industries, like Airlines and others, that are particularly affected by the Chinese Virus. We will be stronger than ever before!" Trump said in a post on Twitter.

Treasury Secretary Steven Mnuchin also said during a press briefing earlier today that the administration is hoping to get cash into Americans' pockets "immediately."

Subsequent reports indicated the Trump administration is considering a fiscal stimulus package that could exceed $1 trillion.

In U.S. economic news, the Commerce Department released a report showing an unexpected decrease in retail sales in the month of February.

The Commerce Department said retail sales fell by 0.5 percent in February after climbing by an upwardly revised 0.6 percent in January.

The pullback came as a surprise to economists, who had expected retail sales to edge up by 0.2 percent compared to the 0.3 percent increase originally reported for the previous month.

Excluding a 0.9 percent decrease in auto sales, retail sales still slid by 0.4 percent in February after rising by an upwardly revised 0.6 percent in January. Ex-auto sales had been expected to tick up by 0.2 percent.

Meanwhile, a separate report from the Federal Reserve showed industrial production rebounded by more than anticipated in the month of February.

The Fed said industrial production climbed by 0.6 percent in February after falling by a downwardly revised 0.5 percent in January.

Economists had expected industrial production to increase by 0.4 percent compared to the 0.3 percent drop originally reported for the previous month.

The National Association of Home Builders also released a report showing homebuilder confidence has deteriorated by slightly more than anticipated in the month of March.

The report said the NAHB/Wells Fargo Housing Market Index fell to 72 in March after edging down to 74 in February. Economists had expected the index to dip to 73.

NAHB Chief Economist Robert Dietz noted more than half of the builder responses were collected prior to March 4, so the recent stock market declines and the rising economic impact of the coronavirus will be reflected more in next month's report.

A report on new residential construction is scheduled to be released on Wednesday but is likely to be overshadowed by the latest developments on the coronavirus front.

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