Treasuries Pull Back Sharply After Initial Upward Move

After an initial move to the upside, treasuries pulled back sharply over the course of the trading session on Tuesday.

Bond prices showed a notable downturn in morning trading and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.6 basis points to 3.964 percent.

The ten-year yield bounced well off its early low of 3.809 percent, ending the session at its highest closing level since April 2010.

The pullback by treasuries came following the release of a batch of largely upbeat U.S. economic data, including a Commerce Department report unexpectedly showing a substantial rebound in new home sales in the month of August.

The report showed new home sales skyrocketed by 28.8 percent to an annual rate of 685,000 in August after plunging by 8.6 percent to a revised rate of 532,000 in July.

The surge surprised economists, who had expected new home sales to slump by 2.2 percent to an annual rate of 500,000 from the 511,000 originally reported for the previous month.

The sharp increase came after new home sales tumbled to their lowest annual rate since hitting 532,000 in March 2016.

The Conference Board also released a report showing a bigger than expected improvement in consumer confidence in the month of September.

The organization said its consumer confidence index climbed to 108.0 in September from an upwardly revised 103.6 in August.

Economists had expected the consumer confidence index to inch up to 104.3 from the 103.2 originally reported for the previous month.

Meanwhile, a separate report released by the Commerce Department showed a modest decrease in new orders for U.S. manufactured durable goods in the month of August.

The Commerce Department said durable goods orders slipped by 0.2 percent in August after edging down by 0.1 percent in July. Economists had expected durable goods orders to decrease by 0.4 percent.

Excluding a steep drop in orders for transportation equipment, durable goods orders inched up by 0.2 percent in August, matching the uptick seen in July as well as economist estimates.

A report on pending home sales may attract attention on Wednesday, while traders are also likely to keep an eye on remarks by Federal Reserve Chair Jerome Powell.

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