Treasuries Show Strong Move Back To The Upside

(RTTNews) - Treasuries showed a strong move back to the upside during trading on Tuesday, regaining ground after moving notably lower over the two previous sessions.

Bond prices moved higher early in the session and remained firmly positive throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.8 basis points to 4.366 percent.

The rebound by treasuries may have reflected bargain hunting, with the ten-year yield pulling back off its highest closing level in over four months.

Traders may also have been looking to the relative safety of treasuries ahead of the release of the Labor Department's report on consumer price inflation on Wednesday.

Economists currently expect consumer prices to rise by 0.3 percent in March following a 0.4 percent increase in February.

Core consumer prices, which exclude food and energy prices, are also expected to climb by 0.3 percent in March after rising by 0.4 percent in February.

The annual rate of consumer price growth is expected to accelerate to 3.4 percent in March from 3.2 percent in February, while the annual rate of core consumer price growth is expected to slow to 3.7 percent for 3.8 percent. The inflation data could have a significant impact on the outlook for interest rates, as Federal Reserve officials have repeatedly said they need greater confidence inflation is slowing before cutting rates.

Wednesday will also see the release of the minutes of the Fed's latest monetary policy meeting, which could also shed additional light on officials' thinking on rates.

"The central bank wants to see sustained evidence of inflation coming down and that doesn't appear to be on the menu," said Dan Coatsworth, investment analyst at AJ Bell.

"The signs are clear for investors to see, but many have been choosing to ignore them," he added. "The Fed putting it into black and white could be a difficult pill for investors to swallow, so brace yourself for turbulence on the market this week."

Early trading on Wednesday is likely to be driven by reaction to the consumer price inflation data, while the Fed minutes may attract attention later in the day.