Treasuries Close Sharply Lower Amid Optimism About Greece

(RTTNews) - Treasuries moved sharply lower over the course of the trading day on Tuesday, extending the downtrend seen throughout much of the month of February.

Bond prices moved steadily lower for much of the session before ending the day firmly in the red. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 12.4 basis points to 2.145 percent.

With the substantial increase on the day, the ten-year yield added to recent gains, reaching its highest closing level in well over a month.

The continued weakness among treasuries was partly due to expectations that Greece will eventually reach an agreement with its eurozone creditors even though talks broke down on Monday.

Adding to the optimism were media reports indicating that the new Greek government plans to apply for an extension to its current loan agreement.

Distinguishing the loan agreement from the full bailout program, the reports said Greece will ask for an extension of up to six months on Wednesday.

While Greece is staunchly opposed to an extension of the current bailout program, Prime Minister Alexis Tsipras highlighted the difference between the bailout accord and the loan agreement in a speech to parliament.

Meanwhile, bond traders largely shrugged off a batch of disappointing U.S. economic data, including a report from the National Association of Home Builders showing an unexpected deterioration in homebuilder confidence.

The report said the NAHB/Wells Fargo Housing Market Index dropped to 55 in February after dipping to 57 in January. The decrease came as a surprise to economists, who had expected the index to inch up to a reading of 58.

A separate report from the New York Federal Reserve showed a bigger than expected decrease by its index of regional manufacturing activity.

While developments in Greece are likely to remain in focus on Wednesday, trading could also be impacted by the release of reports on U.S. housing starts, producer prices, and industrial production.

Traders are also likely to keep an eye on the minutes of the latest Federal Reserve meeting, which could shed some light on the outlook for interest rates.