Bonds retreat after big advance

NEW YORK (CNNMoney.com) -- U.S. Treasury bond prices were mixed Tuesday afternoon as the previous day's rally failed to gain traction and investors shrugged off mixed economic data.

The benchmark 10-year note rose 1/32 to 101 25/32 and its yield held steady at 3.78%.

The 30-year long bond advanced 12/32 to 101 23/32 lifting with a yield of 4.39%.

The 2-year note slid 1/32 to 100 24/32 with a yield of 2.34%. Bond prices and yields move in opposite directions.

Bond prices rose sharply Monday as stocks plummeted on renewed fears that the turmoil in the financial sector will continue to weigh on the economy.

"We had a pretty good rally," said Steve Van Order, chief fixed-income strategist at Calvert Funds in Baltimore. But bonds gave back most of Monday's gains on Tuesday. "We're seeing a bit of a pullback."

The bond market is in "one of the quieter weeks of the year" with many market participants absent ahead of the three-day Labor Day holiday weekend, Van Order said.

While low market volume can often lead to volatile swings, Tuesday's trading was more subdued.

Meanwhile, stock prices were also mixed at the end of a rocky session marked by weak housing data, an upbeat report on consumer confidence and the release of the FDIC's "problem bank" list.

Crude prices rose amid concerns that a hurricane could damage oil installations in the Gulf of Mexico.

Government-backed bonds are seen as relatively safe investments and demand for Treasurys usually rises when the economy appears to be weakening.

Mixed economic news: Home prices fell a record 15.4% in the second quarter compared with last year, according to the latest S&P/Case-Shiller report.

But the bleak housing data was tempered by a better-than-expected report on consumer confidence.

The Conference Board said its August Consumer Confidence Index rose to 56.9 from 51.9 in July. Economists had expected the index to edge up to 53, according to a consensus compiled by Briefing.com.

Later in the session, the Federal Deposit Insurance Corp. said the number of firms on its so-called "problem bank" list grew to 117 during the second quarter from 90 in the first quarter.

That's the highest level since the middle of 2003 and the FDIC said it expects the list to expand in coming months. Banks included on the problem list are considered the most likely institutions to fail, although few actually reach that point.