Treasuries Move Notably Higher Amid Concerns About Middle East Tensions

(RTTNews) - Treasuries showed a notable move to the upside during trading on Tuesday, offsetting the weakness seen in the previous session.

Bond prices gave back ground after an early rally but remained firmly in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.9 basis points to 3.743 percent.

Treasuries benefited from their appeal as a safe haven amid escalating tensions in the Middle East after Iran launched a ballistic missile attack against Israel.

Iran's Islamic Revolutionary Guard Corps said the attack was in response to the killing of Hezbollah leader Hassan Nasrallah and others in recent Israeli airstrikes.

The attack also came after Israel launched ground operations against the Iranian-backed militia group Hezbollah in southern Lebanon.

Israel Defense Forces spokesperson Rear Adm. Daniel Hagari warned the attack by Iran "will have consequences."

A senior White House official said earlier in the day that the U.S. had indications Iran was preparing to imminently launch a ballistic missile attack against Israel, contributing to the early rally by treasuries.

"We are actively supporting defensive preparations to defend Israel against this attack. A direct military attack from Iran against Israel will carry severe consequences for Iran," the official said in a statement.

Buying interest waned following the actual attack, however, as traders expressed optimism cooler heads will prevail, avoiding a broader regional conflict.

The news from the Middle East largely overshadowed separate report showing a continued contraction by U.S. manufacturing activity in September and an unexpected increase by U.S. job openings in August.

A report from payroll process ADP on private sector employment in September may attract attention on Wednesday ahead of the release of the Labor Department's more closely watched monthly jobs report on Friday.