Treasuries Show Notable Move Back To The Upside

(RTTNews) - Following the pullback seen during Monday's session, treasuries showed a notable move back to the upside during trading on Tuesday.

Treasuries gave back ground after an early advance but climbed back firmly into positive territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 6.2 basis points to 4.167 percent.

The rebound by treasuries came as traders remain optimistic about the outlook for interest rates following remarks by Federal Reserve Chair Jerome Powell on Monday.

Powell said the three inflation readings over the second quarter of this year provided policymakers greater confidence that the pace of price growth is returning to the central bank's 2 percent target.

"If you wait until inflation gets all the way down to 2 percent, you've probably waited too long," he said.

On the U.S. economic front, the Commerce Department released a report showing retail sales came in flat in June after rising by an upwardly revised 0.3 percent in May.

Economists had expected retail sales to come in unchanged compared to the 0.1 percent uptick originally reported for the previous month.

Excluding a sharp drop in sales by motor vehicle and parts dealers, retail sales climbed by 0.4 percent in June after inching up by 0.1 percent in May. Ex-auto sales were expected to creep up by 0.1 percent.

The Labor Department also released a report showing import prices in the U.S. were unexpectedly flat in the month of June.

The report said import prices were unchanged in June after dipping by a revised 0.2 percent in May. Economists had expected import prices to rise by 0.2 percent compared to the 0.4 percent decrease originally reported for the previous month.

Meanwhile, the Labor Department said export prices declined by 0.5 percent in June after falling by a revised 0.7 percent in May.

Export prices were expected to edge down by 0.1 percent compared to the 0.6 percent decrease originally reported for the previous month.

Trading on Wednesday may be impacted by reaction to reports on industrial production and housing starts as well as the Federal Reserve's Beige Book.