Treasuries Close Modestly Lower Following Choppy Trading Session

(RTTNews) - Treasuries showed a lack of direction over the course of the trading session on Tuesday before ending the day modestly lower.

Bond prices spent the day bouncing back and forth across the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.6 basis points to 2.238 percent.

With the slight increase on the day, the ten-year yield extended a recent uptrend, reaching a new ten-month closing high.

The modestly lower close by treasuries came following the release of a report from the Commerce Department showing that retail sales increased by more than expected in the month of October.

The report said retail sales climbed by 0.8 percent in October after jumping by an upwardly revised 1.0 percent in September.

Economists expected sales to rise by 0.6 percent, matching the increase originally reported for the previous month.

Excluding an increase in auto sales, retail sales still climbed by 0.8 percent in October following a 0.7 percent increase in September. Ex-auto sales had been expected to rise by 0.5 percent.

Additionally, the report said closely watched core retail sales, which exclude autos, gasoline, building materials and food service, increased by 0.8 percent in October after rising by 0.3 percent in September.

"It hardly needs saying, but this report solidifies the Fed's case for a December rate hike," said Chris Low, chief economist at FTN Financial. "Just one report, November employment, might change their mind now barring a market meltdown."

A separate report from the New York Federal Reserve said regional manufacturing activity has stabilized in the month of November.

The New York Fed said its general business conditions index climbed to a positive 1.5 in November from a negative 6.8 in October, with a positive reading indicating growth in regional manufacturing activity.

Economists had expected the index to rise to a negative 2.3, which would have still indicated a contraction in activity.

Meanwhile, the Labor Department also released a report showing that import prices rose by slightly more than expected in the month of October.

Trading on Wednesday may be impacted by reaction to reports on producer prices, industrial production, and homebuilder confidence.