Treasuries saw a pullback during Tuesday's trading session, reversing the upward movement from the previous day. Early in the session, bond prices dipped slightly and remained in decline throughout. Consequently, the yield on the benchmark ten-year note, which inversely correlates with its price, increased by 2.1 basis points to 3.642 percent.
This rise signifies a rebound for the ten-year yield, following Monday's close at its lowest level in over a year.
The downturn in treasuries was prompted by a Commerce Department report revealing a modest and unexpected rise in U.S. retail sales for August. According to the report, retail sales edged up by 0.1 percent, following a significantly revised 1.1 percent surge in July.
This slight increase defied economists' forecasts, who had predicted a 0.2 percent decline after the retail sector's initially reported 1.0 percent increase the previous month. This data suggests a lower probability that the Federal Reserve will reduce interest rates by 50 basis points in its forthcoming monetary policy decision on Wednesday.
Danni Hewson, head of financial analysis at AJ Bell, noted: "Despite widespread concerns about the health of the US consumer, the latest data indicates resilience rather than weakness that would justify a significant rate cut from the Fed. A 50 basis point cut might be perceived as a sign of worry and suggest that the Fed has delayed action too long, while a gradual, measured approach indicates control and is less likely to be interpreted through a political lens."
Additionally, a separate report from the Federal Reserve highlighted that U.S. industrial production rebounded more robustly than expected in August.
