After coming under pressure early in the session, treasuries regained ground over the course of the trading day on Tuesday.
Bond prices climbed well off their early lows before ending the day roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed unchanged at 4.169 percent after reaching a high of 4.202 percent.
The early weakness among treasuries came after the Commerce Department released a report showing the U.S. economy grew by much more than expected in the third quarter of 2025.
The Commerce Department said real gross domestic product spiked by 4.3 percent in the third quarter after surging by 3.8 percent in the second quarter. Economists had expected GDP to jump by 3.3 percent.
At the same, the report also showed the pace of consumer price growth accelerated in the third quarter compared to the second quarter.
The data led to renewed uncertainty about the outlook for interest rates heading into the new year, with the Federal Reserve scheduled to hold its first meeting of 2026 in late January.
CME Group's FedWatch Tool is currently indicating an 86.7 percent chance the Fed will leave interest rates unchanged, up from 58.0 percent a month ago.
"These data, along with the recently released employment and CPI metrics, show an economy that is growing, but unevenly, and one where inflation is still running well above the FOMC's target," said Mortgage Bankers Association SVP and Chief Economist Mike Fratanton.
He added, "We forecast that the FOMC will be on hold at its January meeting, and will likely cut rates just once more next year."
The early selling pressure was partly offset by the release of a separate Conference Board report showing consumer confidence in the U.S. deteriorated for the fifth consecutive month in December.
The Conference Board said its consumer confidence index slid to 89.1 in December from an upwardly revised 92.9 in November.
Economists had expected the consumer confidence index to rise to 91.9 from the 88.7 originally reported for the previous month.
Trading on Wednesday may be impacted by reaction to a report on weekly jobless claims, although activity is likely to be subdued ahead of the Christmas Day holiday on Thursday.
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Market Analysis
December 19, 2025 15:10 ET U.S. inflation data and interest rate decisions by major central banks were the highlights of this busy week for economics news flow. Employment data and survey results on the housing markets also gained attention in the U.S. In Europe, the European Central Bank and Bank of England announced their policy decisions and macroeconomic projections.