Treasuries Give Back Ground Following Recent Strength

(RTTNews) - After moving notably higher over the past few sessions, treasuries gave back some ground during trading on Tuesday.

Bond prices moved steadily lower in morning trading before moving roughly sideways in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.2 basis points to 2.869 percent.

With the increase, the ten-year yield moved higher for the first time in four sessions, bouncing off the one-month closing low set on Monday.

The pullback by treasuries was partly due to the release of a report from the Commerce Department showing stronger than expected retail sales growth in the month of December.

The report said retail sales edged up by 0.2 percent in December compared to economist estimates for a 0.1 percent increase.

The less volatile core retail sales, which exclude auto, gasoline, and building materials sales, also rose by more than expected.

At the same time, the Commerce Department said the retail sales growth in November was downwardly revised to 0.4 percent from the 0.7 percent originally reported.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "Retail sales in December were better than forecasted but if we include the November downward revisions, the two months taken together are about in line."

"Bottom line, because the December beat was offset by the November miss, Q4 GDP estimates should not change on this number," he added.

Remarks by Federal Reserve officials Charles Plosser and Richard Fisher expressing support for the continued tapering of the central bank's asset purchase program also weighed on treasuries.

Wednesday's trading could be impacted by the release of reports on producer price inflation and New York manufacturing activity as well as the Fed's Beige Book.