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After ending yesterday's volatile session firmly negative, treasuries showed a modest move back to the upside during trading on Tuesday.
Bond prices fluctuated over the course of the session but largely maintained a positive bias. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down 1.6 basis points to 4.389 percent.
The uptick by treasuries came as traders kept an eye on the latest developments on the trade front, with reports indicating Treasury Secretary Scott Bessent told a closed-door investor summit he expects the trade dispute between the U.S. and China to de-escalate.
Citing people who attended the session at an event hosted by JPMorgan Chase (JPM), Bloomberg reported Bessent said negotiations haven't started but that a trade deal with China is possible.
A person in the room also told CNBC that Bessent called the current status quo unsustainable and predicted there will "de-escalation" in the "very near future."
Meanwhile, traders largely shrugged off the results of the Treasury Department's auction of $69 billion worth of two-year notes, which attracted below average demand.
The two-year note auction drew a high yield of 3.795 percent and a bid-to-cover ratio of 2.52, while the ten previous two-year note auctions drew a high yield of 2.67.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.