Following an upward trend earlier in the session, Treasuries displayed a lack of clear direction during Tuesday's trading day. Throughout the day, bond prices fluctuated across the unchanged line before eventually settling slightly lower. Consequently, the yield on the benchmark ten-year note, which inversely relates to its price, declined by 1.5 basis points to 4.788 percent.
With this minor decline, the ten-year yield retraced some of its gains after hitting its highest closing level in over a year the previous Monday.
The modest uptick in Treasuries came after a Labor Department report revealed that producer prices rose slightly less than anticipated in December. The report indicated that the producer price index for final demand increased by 0.2 percent in December, following a 0.4 percent rise in November. Economists had predicted a 0.3 percent rise.
Conversely, the report noted that the annual rate of producer price growth accelerated to 3.3 percent in December, up from 3.0 percent in November, aligning with economists' forecasts.
The lower than expected monthly increase in producer prices helped alleviate some concerns regarding inflation and interest rates, though the faster annual growth led to restrained buying interest.
Traders might have also been hesitant to engage in significant moves ahead of the anticipated release of a key report on consumer price inflation scheduled for Wednesday. Expectations from economists forecast a 0.3 percent increase in consumer prices for December, matching November's rise. The annual growth rate is projected to accelerate to 2.9 percent from 2.7 percent.
