Treasuries Give Back Ground After Last Thursday’s Spike

With trading resuming following a long holiday weekend, treasuries moved to the downside during the session on Monday.

Bond prices moved lower in early trading and remained firmly negative throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 3.6 basis points to 3.865 percent.

The pullback by treasuries came as traders cashed in on the strong upward move seen last Thursday following the release of tamer than expected inflation data.

The ten-year yield plunged by 32.2 basis points last Thursday, ending the session at its lowest closing level in over a month.

Selling pressure was relatively subdued, however, with a lack of major U.S. economic data keeping some traders on the sidelines.

Reports on producer prices, retail sales, import and export prices, industrial production, housing starts and existing home sales are likely to attract attention in the coming days.

Traders are likely to look to the reports for additional clues about the strength of the economy and the outlook for interest rates.

Bond prices climbed off their worst levels of the day as comments from Federal Reserve Vice Chair Lael Brainard added to optimism about a slower pace of rate hikes.

“I think it will probably be appropriate soon to move to a slower pace of rate increases,” Brainard told Bloomberg News in a live interview.

Trading on Tuesday may be impacted by reaction to a report on producer price inflation, which could affect the outlook for interest rates.

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