After moving modestly higher early in the session, treasuries turned lower over the course of the trading day on Tuesday.
Bond prices pulled back well off their initial highs and into negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.7 basis points to 0.653 percent.
The downturn by treasuries came after the Conference Board released a report showing a bigger than expected improvement in consumer confidence in the month of June.
The Conference Board said its consumer confidence index jumped to 98.1 in June from a downwardly revised 85.9 in May.
Economists had expected the consumer confidence index to climb to 90.0 from the 86.6 originally reported for the previous month.
“The re-opening of the economy and relative improvement in unemployment claims helped improve consumers’ assessment of current conditions,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.
Meanwhile, a separate report released by MNI Indicators showed a continued contraction in Chicago-area business activity in the month of June.
MNI Indicators said its Chicago business barometer rose to 36.6 in June from 32.3 in May, but a reading below 50 still indicates a contraction in regional business activity. Economists had expected the index to jump to 45.0.
Traders also kept an eye on Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin’s testimony before the House Financial Services Committee regarding the response to the coronavirus pandemic.
In prepared remarks, Powell noted that output and employment remain far below their pre-pandemic levels and cautioned that the outlook for the economy is “extraordinarily uncertain.”
“A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities,” Powell said.
He added, “The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed.”
Trading on Wednesday may be impacted by reaction to reports on private sector employment and manufacturing activity, while the minutes of the latest Fed meeting may also attract some attention.