Treasuries Close Nearly Flat After Recovering From Early Weakness

(RTTNews) - After initially coming under pressure, treasuries showed a notable recovery as the trading day progressed on Tuesday before closing roughly flat.

Bond prices climbed well off their early lows before ending the day near the unchanged line. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.450 percent.

The early weakness among treasuries was partly due to a sharp increase by the price of crude oil, with crude for February jumping to an eighteen-month high of $55.24 a barrel.

Traders were also reacting to a batch of upbeat economic data, including a report from the Institute for Supply Management showing that growth in U.S. manufacturing activity accelerated by more than anticipated in December.

The ISM said its purchasing managers index climbed to 54.7 in December from 53.2 in November, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to inch up to 53.8.

The purchasing managers index indicated growth in manufacturing for the fourth consecutive month and a new high reading for the year.

A separate report from the Commerce Department showed that construction spending climbed more than expected in November to reach its highest annual rate in over ten years.

The better than expected U.S. economic data came following the release of an upbeat reading on Chinese manufacturing activity.

The recovery by treasuries came amid a downturn by the price of crude oil, as crude for February pulled back sharply to close down $1.39 at $52.33 a barrel.

Trading on Wednesday may be impacted by reaction to a report on private sector employment as well as the minutes of the latest Federal Reserve meeting.