Treasuries Give Back Ground Following Yesterday's Strength

(RTTNews) - Treasuries came under pressure during trading on Wednesday, offsetting the strength that was seen in the previous session.

Bond prices moved lower in early trading and saw some further downside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.2 basis points to 2.389 percent.

With the increase on the day, the ten-year yield rebounded after ending Tuesday's trading at its lowest closing level in well over a month.

The pullback by treasuries came following the release of a report from the Labor Department showing that consumer prices increased in line with estimates in December.

The Labor Department said its consumer price index rose by 0.3 percent in December after edging up by 0.2 percent in November.

Excluding food and energy prices, the core consumer price index crept up by 0.2 percent for the second consecutive month. The uptick in core prices also matched economist estimates.

The report also showed an acceleration in the annual rate of consumer price growth, supporting expectations for further interest rate hikes by the Federal Reserve this year.

A separate report from the Fed showed a rebound in industrial production in December, with the increase primarily reflecting a jump in utilities output.

The Fed said industrial production climbed by 0.8 percent in December after slumping by a revised 0.7 percent in November. Economists had expected production to increase by 0.6 percent

Meanwhile, the National Association of Realtors released a report showing a modest pullback in homebuilder confidence in the month of January.

The report said the NAHB/Wells Fargo Housing Market Index dipped to 67 in January after jumping to an eleven-year high of 69 in December.

Treasuries saw continued weakness following the release of the Federal Reserve's Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts.

The Beige Book said reports from the twelve districts indicated that the economy continued to expand at a modest pace across most regions from late November through the end of the year.

The Fed also said labor markets were reported to be tight or tightening during the period while noting that pricing pressures intensified somewhat since the last report.

Another batch of economic data is scheduled to be released on Thursday, with traders likely to keep an eye on reports on weekly jobless claims, housing starts, and Philadelphia-area manufacturing activity.

The Treasury Department is also due to announce the details of next week's auctions of two-year-five-year, and seven-year notes.