2019.02.1915:25:00UTC+00Treasuries Pull Back Off Best Levels But Close Moderately Higher

After ending last Friday's trading slightly lower, treasuries moved back to the upside over the course of the session on Tuesday.

Bond prices gave back some ground after an early upward move but remained in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.7 basis points to 2.647 percent.

Treasuries may have benefited from their appeal as a safe haven amid uncertainty about the potential for a trade deal between the U.S. and China as the next round of trade talks get underway in Washington, D.C. this week.

News that China accused the U.S. of attempting to curtail its technology development by putting pressure on allies to shun networks supplied by Huawei Technologies raised concerns about tensions between the world's two largest economies.

However, President Donald Trump later told reporters the U.S.-China trade talks are "going very well" and once again hinted that an early March deadline to reach a deal could be postponed.

"I can't tell you exactly about timing, but the date is not a magical date," Trump said in the Oval Office. "A lot of things can happen."

Trump claimed China is "trying to move fast" so that an increase in tariffs on Chinese goods currently set to take effect does not happen.

Meanwhile, bond traders largely shrugged off a report from the National Association of Home Builders showing a much bigger than expected improvement in homebuilder confidence in the month of February.

The report said the NAHB/Wells Fargo Housing Market Index climbed to 62 in February after rising to 58 in January. Economists had expected the index to inch up to 59.

With the increase, the index continued to recover after hitting a more than three-year low of 56 in December.

"Ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment," said NAHB Chairman Randy Noel.

He added, "In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season."

Trading on Wednesday may be impacted by reaction to the release of the minutes of the Federal Reserve's latest monetary policy meeting, which may shed additional light on the central bank's "patient" approach to raising interest rates.