Extending the rebound seen in the previous session, treasuries showed another move to the upside during trading on Tuesday.
Bond prices gave back ground after an early upward move but climbed back firmly into positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 1.812 percent.
With the drop on the day, the ten-year yield continued to give back ground after ending last Friday's trading at its best closing level in over a month.
The continued recovery by treasuries came as traders looked ahead to the Federal Reserve's monetary policy decision on Wednesday.
The Fed is widely expected to lower interest rates by another 25 basis points, with traders likely to pay closer attention to the accompanying statement for clues about the long-term outlook for rates.
Treasuries may also have benefited from uncertainty about the U.S. response to the recent attacks on Saudi Arabian oil facilities.
President Donald Trump has indicated the U.S. is prepared to respond militarily but has stopped short of definitively blaming Iran for the attacks.
Trump told reporters diplomacy has not been exhausted when it comes to Iran and would not rule out meeting with Iranian President Hassan Rouhani on the sidelines of the United Nations General Assembly next week.
On the U.S. economic front, the Fed released a report showing industrial production rebounded by much more than anticipated in the month of August.
The report said industrial production climbed by 0.6 percent in August after edging down by a revised 0.1 percent in August.
Economists had expected industrial production to rise by 0.2 percent compared to the 0.2 percent dip originally reported for the previous month.
A separate report from the National Association of Home Builders showed an unexpected improvement in U.S. homebuilder confidence in the month of September.
The report said the NAHB/Wells Fargo Housing Market Index inched up to 68 in September from an upwardly revised August reading of 67.
Economists had expected the index to come in unchanged compared to the 66 originally reported for the previous month.
The Fed's monetary policy announcement is likely to be in the spotlight on Wednesday, overshadowing a report on new residential construction.
For comments and feedback contact: editorial@rttnews.com
Market Analysis