Treasuries moved to the downside during trading on Tuesday, extending the steep drop seen over the course of the previous session.
Bond prices came under pressure early in the session and remained firmly negative throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4 basis points to 1.668 percent.
The ten-year yield added to the 11.6 basis point spike seen on Monday, ending the session at its highest closing level in over two months.
The continued weakness among treasuries came as traders remain optimistic about the economic outlook even as the U.S. reported more than 1 million new Covid cases on Monday.
Indications the new Omicron variant causes milder symptoms has led to hopes the recent surge could actually help to accelerate the end of the pandemic.
The sharp decline by treasuries in the first two trading days of 2022 also came as the Federal Reserve prepares to wrap up its asset purchase program and begin raising interest rates.
On the U.S. economic front, the Institute for Supply Management released a report showing activity in the manufacturing sector grew at a slower rate in the month of December.
The ISM said its manufacturing PMI slid to 58.7 in December from 61.1 in November. While a reading above 50 still indicates growth in the sector, economists had expected the index to show a much more modest decrease to 60.2.
A report on private sector employment may attract attention on Wednesday along with the minutes of the latest Fed meeting, which may shed additional light on the outlook for monetary policy.
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