Treasuries Pull Back Off Early Highs But Remain Positive

(RTTNews) - Treasuries moved to the upside during trading on Tuesday, extending the notable rebound seen in the previous session.

Bond prices gave back some ground after an early surge but remained in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.3 basis points to 2.958 percent after hitting a low of 2.899 percent.

Treasuries continued to benefit from their appeal as a safe haven amid concerns about a slowdown or outright recession by the global economy.

Concerns about the emergence of a new, more infectious Covid-19 strain in several parts of the world continue to weigh on investors' minds.

Many cities in China are already taking steps to stop the spread of the new strain, leading to worries about another round of painful lockdowns, especially in Shanghai or Beijing.

A Covid-19 resurgence and the resumption of Chinese lockdowns could put further pressure on a global economy that is already being squeezed by aggressive monetary policy tightening by the world's central banks.

Trading on Wednesday is likely to be driven by reaction to the Labor Department's latest reading on consumer price inflation, which could impact the outlook for interest rates.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of $19 billion worth of thirty-year bonds.