Bonds

Treasury yields turn higher after better-than-expected reading on services economy

Treasury yields rose slightly on Tuesday on stronger-than-expected economic data on the services industry.

Treasurys

The yield on the benchmark 10-year Treasury note, which moves inversely to price, climbed to around 1.82%, while the yield on the 30-year Treasury bond also rose to around 2.30%.

Yields cut losses and turned higher after data showed services sector expanded more than expected last month. December's ISM non-manufacturing index came in at 55.0, versus 54.3 expected.

Also, the U.S. trade deficit contracted to $43.1 billion in November, the lowest level of the Trump administration. Much of the gain came from a reduction of the gap with China.

Still, the benchmark 10-year yield has tumbled more than 10 basis points in the new year as investors reassessed the risk of an all-out conflict in the Middle East.

The Pentagon said on Monday that a U.S. general's letter appearing to inform Iraq's Defense Ministry that U.S.-led coalition troops were preparing to leave the country "was a mistake."

Instead, Joint Chiefs of Staff Chairman Gen. Mark Milley told reporters that the letter was an unsigned draft that "should never have been released."

The confusion came less than 24 hours after Iraq's parliament passed a nonbinding resolution calling for the removal of American forces and other foreign troops.

U.S.-Iran tensions have ratcheted up in recent days, following a U.S. airstrike at Baghdad's International Airport that killed Iran's leading general, Qasem Soleimani.

The U.S. Treasury auctioned $38 billion in three-year notes on Tuesday.