Treasuries are seeing continued weakness Tuesday after turning lower over the course of the previous session. The downturn on Monday came as the Dow experienced its best day of the year after the Treasury Department released details of a plan to buy up banks' toxic assets.
With no significant economic news on tap for the day, investors have additional time to digest Monday's better-than-expected housing data, which seemed to be eclipsed by the Treasury news.
Later this morning, investors are likely turn their attention to Capitol Hill, where Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner are set to testify at a House Financial Services Committee heading on AIG (AIG).
In recent trading, the benchmark ten-year note has moved well off its worst level of the day, although it currently remains in the red. Subsequently, the yield on the ten-year note is currently up 3.2 basis points at 2.692 percent.
Last week, treasuries saw considerable movement as the Federal Reserve announced its plans to purchase more than $1 trillion in treasuries and securities.
The Fed's purchase plan and the historically low Federal Funds rate along with Monday's Treasury plan are part of a three-pronged approach to deal with the recent economic slowdown.
The Treasury's plan involves using up to $100 billion in funds from the $700 billion financial rescue plan passed in 2008 in addition to capital from private investors to generate an estimated $500 billion to purchase the toxic assets, a number that could double to $1 trillion over time.
In the latter part of the trading day, trading is likely to be impacted by the release of the results of the Treasury Department's auction of $40 billion worth of two-year notes.
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