After ending the previous session modestly lower, treasuries saw some further downside during the trading day on Tuesday.
Bond prices moved lower early in the session and remained negative throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.4 basis points to 3.102 percent.
With the increase on the day, the ten-year yield climbed to its highest closing level in four months.
The continued weakness among treasuries came as traders looked ahead to the Federal Reserve’s monetary policy announcement on Wednesday.
The Fed is widely expected to raise interest rates by 25 basis points, although traders are likely to pay close attention to the accompanying statement for clues about the outlook for rates.
Fed Chairman Jerome Powell’s subsequent press conference is also likely to attract attention, with the central bank expected to raise rates at least once more this year.
On the U.S. economic front, the Conference Board released a report showing an unexpected improvement in consumer confidence in the month of September.
The Conference Board said its consumer confidence index climbed to 138.4 in September from an upwardly revised 134.7 in August.
Economists had expected the consumer confidence index to drop to 131.7 from the 133.4 originally reported for the previous month.
With the unexpected increase, the consumer confidence index reached a new 18-year high and is not far from the all-time high of 144.7 reached in 2000.
“These historically high confidence levels should continue to support healthy consumer spending, and should be welcome news for retailers as they begin gearing up for the holiday season,” said Lynn Franco, Director of Economic Indicators at the Conference Board.
Meanwhile, the Treasury Department’s auction of $38 billion worth of five-year notes attracted modestly below average demand.
The five-year note auction drew a high yield of 2.997 percent and a bid-to-cover ratio of 2.39, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.48.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
The Fed announcement is likely to be in the spotlight on Wednesday, overshadowing the release of the Commerce Department’s report on new home sales in August.