By Sunny Oh

Treasury yields was mostly flat in early Tuesday trading ahead of data that could give the latest indication of the economy's momentum in the third quarter.

The 10-year Treasury note yield was up 0.8 basis points to 3.171%. The 2-year note yield was up by 0.5 basis point to 2.866%, while the 30-year bond yield rose 1.1 basis points to 3.352%, close to its more than four-year high of 3.401%, according to Tradeweb data.

Bond prices move in the opposite direction of yields.

Investors will closely watch a raft of data in the morning to see if the economy can pick up steam into the end of this year even as the stimulus of tax cuts fade. Current estimates for third-quarter growth from the Atlanta and the New York branches of the Federal Reserve range between 4% and 2.25%. Another strong third-quarter is likely to keep the Fed hiking rates at its gradual pace of one hike every three months.

"At this point it's not obvious there is any slowing whatsoever in economic momentum, let alone something pernicious," said Tom Porcelli, chief U.S. economist for RBC Capital Markets.

Industrial production data for September is expected at 9:15 a.m. Eastern, with economists polled by MarketWatch expecting an increase of 0.1%. This will be followed by August's job openings and labor turnover survey, or JOLTS report, at 10 a.m., which could indicate the tightness of the labor market, a contributor to building wage and inflationary pressures.

But traders say the bond market will ultimately take its direction from equities after volatility seared through risk assets last week. Stocks are set to open higher as they attempt to recover from the previous session's slide.

Dow Jones Industrial Average futures picked up more than a 100 points, while the S&P 500 futures rose 0.5%.

Analysts will also parse the Treasury International Capitol's report on foreign holdings of U.S. government bonds, which could show whether high currency hedging costs deterred international investors from buying Treasurys, despite their relatively richer yields compared to European and Japanese debt. Market participants said one contributor to the recent yield backup was a lack of foreign buyers supporting the bond market.

(END) Dow Jones Newswires

October 16, 2018 08:16 ET (12:16 GMT)

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