Treasuries Close Modestly Higher Following Choppy Trading Day

(RTTNews) - Treasuries showed a lack of direction throughout much of the trading day on Tuesday before ending the session modestly higher.

After lingering near the unchanged line for most of the day, bond prices moved to the upside going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2 basis points to 2.746 percent.

The choppy trading seen for much of the session came as traders seemed reluctant to make any significant moves ahead of the Federal Reserve's monetary policy announcement on Wednesday.

Traders will be closely watching for any comments regarding the outlook for the Fed's asset purchase program following December's decision to begin scaling back stimulus.

A mixed batch of economic data may have added to recent uncertainty about the economy and the likelihood of further tapering by the Fed.

Before the start of trading, the Commerce Department released a report showing an unexpected drop in durable goods orders in the month of December.

The report said durable goods orders tumbled by 4.3 percent in December compared to economist estimates for an increase of about 1.8 percent. The drop largely reflected a 9.5 percent decrease in orders for transportation equipment.

On the other hand, Standard & Poor's released a report showing that its index of home prices in major metropolitan areas increased at an annual rate of 13.7 percent in November, reflecting a modest acceleration from the 13.6 percent growth seen in October.

The Conference Board also released a report showing a continued improvement in consumer confidence in the month of January.

The report said the consumer confidence index climbed to 80.7 in January from a downwardly revised 77.5 in December. Economists had expected the index to edge up to 79.0 from the 78.1 originally reported for the previous month.

Meanwhile, the Treasury Department kicked off this week's series of long-term securities auctions with the sale of $32 billion worth of two-year notes.

The two-year note auction drew a high yield of 0.380 percent and a bid-to-cover ratio of 3.30, matching the average from the ten previous auctions.

With the Fed likely to be in the spotlight, trading activity on Wednesday may be somewhat subdued in the lead up to the policy announcement at 2 pm ET.