Treasuries Close Modestly Higher After Volatile Trading Day

(RTTNews) - Treasuries saw considerable volatility over the course of the trading day on Tuesday before ending the session modestly higher.

After turning higher in morning trading, bond prices gave back some ground in the afternoon but closed in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.1 basis points to 2.628 percent.

Treasuries initially moved lower on the day due in part to concerns about the outlook for inflation following the release of a Labor Department report showing a bigger than expected increase in consumer prices in March.

The Labor Department said its consumer price index rose by 0.2 percent in March after inching up by 0.1 percent in each of the two previous months. Economists had been expecting another 0.1 percent increase.

The core consumer price index, which excludes food and energy prices, also rose by 0.2 percent in March after ticking up by 0.1 percent for three straight months. Core prices had been expected to inch up by 0.1 percent once again.

However, buying interest emerged in the bond market after the National Association of Home Builders released a report showing that homebuilder confidence has improved by less than expected in April.

The report showed that the NAHB/Wells Fargo Housing Market Index edged up to 47 in April from a downwardly revised 46 in March, while economists had expected the index to climb to a reading of 49.

Escalating tensions in Ukraine also increased the appeal of safe havens such as treasuries amid concerns about the possibility of a civil war.

Meanwhile, treasuries pulled back off their highs for the session late in the day amid a notable rebound by stocks on Wall Street.

Economic data is likely to remain in focus during trading on Wednesday, with traders likely to keep an eye on reports on housing starts and industrial production.

Remarks by Federal Reserve Chair Janet Yellen may also attract some attention along with the release of the Fed's Beige Book.