2021.04.0619:23:00UTC+00Treasuries Show Strong Move Back To The Upside

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

Bond prices moved steadily higher as they day progressed before closing firmly in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 6.4 basis points to 1.656 percent.

The advance by treasuries may have reflected optimism the Federal Reserve will leave interest rates unchanged despite signs of strength in the U.S. economy.

In an interview with CNBC on Monday, Cleveland Federal Reserve President Loretta Mester said she welcomed last Friday's much better than expected monthly jobs report but stressed it wasn't enough to convince the Fed that it's time to change monetary policy.

"I'm thinking that we'll see a very strong second half of the year, but we're still far from our policy goals," Mester said. "It was great to see that report. We need more of them coming our way."

The Fed has repeatedly stated interest rates will remain at near-zero levels until labor market conditions reach levels consistent with maximum employment and inflation is on track to moderately exceed 2 percent.

Meanwhile, traders largely shrugged off news the International Monetary Fund raised its global growth projections for this year and next, citing huge fiscal stimulus in some big economies and a vaccine-driven recovery in the future.

The world economy is set to grow 6.0 percent this year and 4.4 percent next year, the global lender said in its latest World Economic Outlook report..

In a January update to the WEO, the IMF had projected growth of 5.5 percent and 4.2 percent, respectively. The latest projections are also stronger than those in the October WEO report.

The Fed is scheduled to release the minutes of its latest monetary policy meeting on Wednesday, potentially shedding additional light on the outlook for interest rates.