2022.05.2419:09:00UTC+00Treasuries Show Significant Move Back To The Upside

Treasuries showed a significant move to the upside during trading on Tuesday, more than offsetting the pullback seen in the previous session.

Bond prices gave back some ground after an early rally but remained firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 9.9 basis points to 2.760 percent.

The ten-year yield more than offset the 7.2 basis point increase seen on Monday, ending the session at its lowest closing level in over a month.

The rebound by treasuries came amid a pullback by stocks on Wall Street, which once again came under pressure after showing a strong upward move in the previous session.

The pullback on Wall Street came after Snapchat parent Snap Inc. (SNAP) warned of weaker than expected second quarter results, saying the "macroeconomic environment has deteriorated further and faster than anticipated."

Weakness overseas also carried over onto Wall Street, as a broad package of Chinese measures to support the economy underwhelmed investors.

Lingering concerns aggressive interest rate hikes by the Federal Reserve could lead to a recession also continued to weigh on Wall Street.

On Wednesday, the Fed is due to release the minutes from its latest monetary policy meeting, which may shed additional light on the outlook for rates.

The strength among treasuries also came after the Commerce Department released a report showing a much steeper than expected drop in new home sales in the month of April.

The report showed new home sales plunged by 16.6 percent to an annual rate of 591,000 in April after tumbling by 10.5 percent to a revised rate of 709,000 in March.

Economists had expected new home sales to slump 1.7 percent to a rate of 750,000 from the 763,000 originally reported for the previous month.

With the much bigger than expected decrease, new home sales dropped to their lowest annual rate since hitting 582,000 in April of 2020.

The minutes of the latest Fed meeting are likely to be in the spotlight on Wednesday, while traders are also likely to keep an eye on a report on durable goods orders.

Bond trading could also be impacted by reaction to the results of the Treasury Department's auction of $48 billion worth of five-year notes.

Earlier today, the Treasury revealed this month's auction of $47 billion worth of two-year notes attracted modestly above average demand.