Treasuries Close Modestly Higher But Well Off Best Levels

(RTTNews) - Extending the upward move seen over the two previous sessions, treasuries ended Tuesday's trading modestly higher.

After seeing early strength, bond prices gave back some ground but remained in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.7 basis points to 2.19 percent.

Treasuries initially benefited from continued concerns about the political situation in Greece after the country's parliament failed to elect a president.

Peter Boockvar, managing director at the Lindsey Group, said the biggest market risk is not what happens politically or economically in Greece but if the developments there impact what the European Central Bank wants to do going forward.

"The possibility of the Syriza party winning the January 25th election, 3 days after the ECB's next meeting, won't likely alter Draghi's plans for sovereign QE but it could complicate it," Boockvar said.

However, treasuries pulled back off their highs as the day progressed due in part to the release of a report showing a rebound in U.S. consumer confidence.

The Conference Board said its consumer confidence index climbed to 92.6 in December from an upwardly revised 91.0 in November.

Economists had expected the index to jump to a reading of 93.0 from the 88.7 originally reported for the previous month.

Lynn Franco, Director of Economic Indicators at The Conference Board, "Consumer confidence rebounded modestly in December, propelled by a considerably more favorable assessment of current economic and labor market conditions."

Reports on jobless claims, pending home sales, and Chicago business activity may attract attention on Wednesday, although trading activity is likely to be somewhat subdued due to it being New Year's Eve.