Treasuries Extend Upward Trend Amid Drop In Consumer Confidence

(RTTNews) - Treasuries moved notably higher over the course of the trading day on Tuesday, extending the upward trend seen over the past two weeks.

Bond prices moved steadily higher in morning trading and remained firmly positive throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.1 basis points to 2.653 percent.

With the drop on the day, the ten-year yield closed lower for the ninth time in the past ten sessions, hitting its lowest closing level in a month.

Treasuries benefited from optimism that the Federal Reserve will maintain its asset purchase program for the near future as it waits for more convincing signs regarding the economic outlook.

Buying interest was likely generated by a report from the Conference Board showing a drop in U.S. consumer confidence in the month of September.

The Conference Board said its consumer confidence index dipped to 79.7 in September from an upwardly revised 81.8 in August. Economists had been expecting the index to edge down to 80.0.

Lynn Franco, Director of Economic Indicators at the Conference Board, said the drop in consumer confidence reflected renewed concerns about the short-term outlook for both jobs and earnings.

"While overall economic conditions appear to have moderately improved, consumers are uncertain that the momentum can be sustained in the months ahead," Franco said.

The concerns expressed by consumers in the Conference Board's survey seem to reflect similar worries plaguing members of the Federal Reserve.

Treasuries saw continued strength following the release of the results of the Treasury Department's auction of $33 billion worth of two-year notes, which drew a high yield of 0.348 percent and a bid-to-cover ratio of 3.09.

A fresh batch of economic data is likely to impact trading on Wednesday, with traders likely to keep a close eye on reports on durable goods orders and new home sales.

Bond trading could also be impacted by reaction to the results of the Treasury's auction of $35 billion worth of five-year notes.