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Treasuries Close Slightly Lower Following Choppy Trading Day

Treasuries showed a lack of direction over the course of the trading session on Tuesday before ending the day slightly lower.

Bond prices spent most of the session bouncing back and forth across the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.1 basis points to 1.634 percent.

The modestly lower closed by treasuries came following the release of some upbeat U.S. economic data, including a Commerce Department report showing retail sales shot up by more than expected in the month of October.

The report said retail sales spiked by 1.7 percent in October after climbing by an upwardly revised 0.8 percent in September.

Economists had expected retail sales to jump by 1.4 percent compared to the 0.7 percent increase originally reported for the previous month.

Excluding sales by motor vehicles and parts dealers, retail sales still surged up by 1.7 percent in October after rising by 0.7 percent in September. Ex-auto sales were expected to advance by 1.0 percent.

However, analysts noted that the strong retail sales growth during the month was largely due to inflation, as retail sales are reported in nominal dollars.

"Adjusted for inflation, real sales were closer to a 0.1% headline increase and ex-gasoline a 0.3% increase," said Will Compernolle, Senior Economist at FHN Financial. "The inflation-adjusted spending is still above the pre-pandemic trend but slowing."

The Federal Reserve also released a report showing industrial production rebounded by much more than expected in the month of October.

The report showed industrial production surged up by 1.6 percent in October after tumbling by 1.3 percent in September. Economists had expected industrial production to increase by 0.7 percent.

The Fed said about half of the rebound in industrial production in October reflected a recovery from the effects of Hurricane Ida.

A separate report released by the National Association of Home Builders unexpectedly showed a continued improvement in homebuilder confidence in the month of November.

Following the slew of U.S. economic data released this morning, the economic calendar for Wednesday is relatively quiet.

Traders are still likely to keep an eye on the Commerce Department's report on new residential construction as well as comments by a number of Fed officials.

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