Treasurys Post Gains as Stocks Point Lower

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U.S. Treasurys prices rose on Tuesday, reversing the previous day's slide triggered by soft-looking data, as U.S. stock markets appeared poised for a lower opening.

On Monday, government bonds fell after data showed an unexpected rise in U.S. retail sales last month, which hinted at a soft patch in the world's biggest economy, while lending credence to talk over whether the Federal Reserve might begin to tighten policy later this year. Retail sales, which account for about 30 percent of consumer spending, rose 0.1 percent in April.

Yet bonds showed little reaction to figures showing that U.S. import prices fell in April due to a drop in oil costs, a positive sign for household finances that also pointed to benign inflation pressures.

Benchmark 10-year Treasury notes last traded up 8/32 in price to yield 1.898 percent, while the 30-year bond rose 16/32, its yield easing to 3.10 percent.

US Treasury Yields

Still, markets are speculating on whether and when the Federal Reserve might be inclined to end its bond purchases should the economy show better-than-expected growth.

Fewer purchases of Treasuries by the Fed, which is now buying U.S. Treasuries and mortgage-backed securities at a pace of $85 billion a month, would also tend to push yields higher.

--Reuters contributed to this article.