Treasuries Close Roughly Flat After Seeing Initial Strength

After seeing an initial move to the upside, treasuries gave back ground over the course of the trading session on Tuesday.

Bond prices pulled back well off their early highs before ending the day roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.889 percent after hitting a low of 1.856 percent.

Treasuries ended the day little changed as traders seemed reluctant to make any significant moves as they wait to determine the next catalyst that will drive the markets.

With a phase one U.S.-China trade deal nearing the finishing line and the Federal Reserve likely on hold for the foreseeable future, investors will need to find new sources of inspiration.

Meanwhile, traders largely shrugged off a batch of upbeat U.S. economic data, including a Commerce Department report showing a bigger than expected spike in housing starts in the month of November.

The report said housing starts surged up by 3.2 percent to an annual rate of 1.365 million in November from a revised October estimate of 1.323 million.

Economists had expected housing starts to jump by 2.4 percent to a rate of 1.345 million from the 1.314 million originally reported for the previous month.

Building permits, an indicator of future housing demand, also climbed by 1.4 percent to an annual rate of 1.482 million in November from a rate of 1.461 million in October.

The continued increase came as a surprise to economists, who had expected building permits to slump by 3.5 percent to a rate of 1.410 million.

A separate report from the Fed showed U.S. industrial production rebounded by more than expected in the month of November.

The report said industrial production jumped by 1.1 percent in November after tumbling by a revised 0.9 percent in October.

Economists had expected industrial production to climb by 0.8 percent compared to the 0.8 percent slump originally reported for the previous month.

Looking ahead, trading activity may remain somewhat subdued on Wednesday amid a quiet day on the U.S. economic front.

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