(RTTNews) - After moving lower over the course of the previous session, treasuries moved back to the upside during trading on Tuesday.
Bond prices moved higher early in the session and remained firmly positive throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.8 basis points to 0.581 percent.
The early strength among treasuries came as traders kept an eye on developments in Washington after Republicans unveiled their version of a new coronavirus relief bill.
The GOP bill includes a reduction in unemployment benefits, which could lead to an impasse in negotiations with Democrats.
Treasuries also benefited from the release of a report from the Conference Board showing consumer confidence deteriorated by more than expected in the month of July.
The Conference Board said its consumer confidence index slumped to 92.6 in July after jumping to an upwardly revised 98.3 in June.
Economists had expected the consumer confidence index to pull back to 95.7 from the 98.1 originally reported for the previous month.
The bigger than expected drop by the index came as consumers grew less optimistic about the short-term outlook for the economy.
"Large declines were experienced in Michigan, Florida, Texas and California, no doubt a result of the resurgence of COVID-19," said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.
She added, "Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending."
Meanwhile, the Treasury Department revealed this month's auction of $44 billion worth of seven-year notes attracted slightly below average demand.
The seven-year note auction drew a high yield of 0.446 percent and a bid-to-cover ratio of 2.45, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.51.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Trading activity may be somewhat subdued on Wednesday as traders wait for the Federal Reserve's monetary policy announcement.
While the Fed is widely expected to leave interest rates unchanged, traders may look to the accompanying statement for clues about future plans to provide additional economic stimulus.
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