Ten-Year Yield Spikes To Four-Month Closing High

(RTTNews) - With bond trading resuming following the Veterans Days holiday on Monday, treasuries showed a significant move to the downside during trading on Tuesday.

Bond prices came under pressure early in the session and slid more firmly into negative territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, spiked by 12.4 basis points to a four-month closing high of 4.432 percent.

The sell-off by treasuries came as traders cashed in on the notable advance seen over the two previous sessions.

Concerns President-elect Donald Trump's policies will result in renewed inflation and lead the Federal Reserve to keep interest rates higher for longer also weighed on treasuries.

The weakness in the bond market also came as traders looked ahead to the release of closely watched U.S. economic data in the coming days.

A highly anticipated report on consumer price inflation is due to be released on Wednesday, while reports on producer price inflation, retail sales and industrial production are likely to attract attention later in the week.

"Inflation-related data releases take on heightened importance as markets try to ascertain whether the Fed can, absent weakness in the labor market, deliver the rate cut cycle it had expected just a few months ago--- and whether the already extended market can withstand the possibility that the Fed could remain higher for longer," said Quincy Krosby, Chief Global Strategist for LPL Financial.

Trading on Wednesday is likely to be driven by reaction to the Labor Department's report on consumer price inflation in the month of October.