Following a robust upward movement in the previous session, treasury markets saw a partial retracement on Tuesday. Bond prices, although recovering from their lowest levels during the afternoon, still concluded the day with slight declines. Consequently, the yield on the ten-year benchmark note, which inversely correlates with its price, increased by 2.3 basis points, reaching 4.551 percent.
This uptick marks a rebound in the ten-year yield, which had previously closed at its lowest level in over a month during the last session. The dip in treasuries is attributed to traders capitalizing on the prior day's rally, in anticipation of the Federal Reserve's forthcoming monetary policy announcement slated for Wednesday.
While it is widely anticipated that the Fed will keep interest rates steady, traders will be keenly observing the accompanying statement for any insights regarding future rate expectations. Recent economic indicators have heightened concerns over the Fed maintaining current rates for an extended period; nevertheless, a number of economists predict the central bank will resume rate reductions within the first half of the year.
According to the CME Group's FedWatch Tool, there is currently a 74.5 percent probability that rates will be reduced by at least a quarter point following the Fed's June meeting.
In terms of U.S. economic developments, a report from the Commerce Department surprisingly revealed a significant decline in new orders for U.S. manufactured durable goods in December, primarily due to a sharp decrease in orders for transportation equipment. The department noted that durable goods orders fell by 2.2 percent in December, following a revised decrease of 2.0 percent in November. Economists had anticipated an increase of 0.8 percent in durable goods orders, compared to the 1.2 percent drop previously reported for November.
Excluding the notable decline in transportation equipment orders, durable goods orders actually rose by 0.3 percent in December, after a marginal decrease of 0.2 percent in November. Forecasts had predicted a 0.4 percent increase in ex-transportation orders.
Additionally, the Conference Board released a report indicating a decrease in the U.S. consumer confidence index from December to January, despite December's figure being notably revised upwards. The January index registered at 104.1, down from the revised 109.5 in December. Economists had projected an increase in the consumer confidence index to 106.3, from the initially reported 104.7 in the previous month.
As trading commences on Wednesday, market activity might be somewhat reserved as traders await the Fed's monetary policy announcement scheduled for later in the day.
