Treasuries Close Sharply Higher Amid Falling Oil Prices

(RTTNews) - Extending the strong upward move seen over the past several sessions, treasuries moved notably higher during trading on Tuesday.

After moving sharply higher in morning trading, bond prices gave back some ground in the afternoon but remained firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 7.6 basis points to 1.963 percent.

With the drop on the day, the ten-year yield closed lower for the seventh straight session, hitting its lowest closing level in well over a year.

The strength among treasuries was partly due to continued weakness among stocks, which saw further downside following yesterday's sell-off

A continued drop by the price of crude oil weighed on Wall Street, with crude for February delivery tumbling $2.11 to a new five-year closing low of $47.93 a barrel.

Treasuries also benefited from the release of some disappointing U.S. economic data, including a report from the Institute for Supply Management showing that activity in the service sector grew at a notably slower rate in the month of December.

The ISM said its non-manufacturing index fell to 56.2 in December from 59.3 in November. While a reading above 50 indicates continued growth in the service sector, economists had expected the index to show a more modest drop to 58.0.

With the bigger than expected decrease, the non-manufacturing index fell to its lowest level since hitting 56.0 last June.

However, Paul Dales, Senior U.S. Economist at Capital Economics, said the drop by the index is "nothing to worry about since November's reading was a nine-year high."

A separate report from the Commerce Department showed a slightly bigger than expected drop in factory orders in the month of November.

Economic data may also attract attention on Wednesday, with traders likely to keep an eye on reports on private sector employment and international trade.

The Federal Reserve is also scheduled to release the minutes of its latest meeting, which could shed some light on the outlook for monetary policy.