Treasuries Close Modestly Higher On Weaker Than Expected Data

(RTTNews) - After moving sharply higher over the course of the previous session, treasuries saw some further upside during trading on Monday.

Bond prices moved moderately higher in early trading but gave back some ground as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.3 basis points to 2.805 percent.

With the modest drop on the day, the ten-year yield added to the 8.3 basis point loss posted on Friday, pulling back further off the two-year closing high set last Thursday.

The early strength among treasuries came on the heels of the release of a Commerce Department report showing that orders for U.S. manufactured durable goods fell by more than expected in the month of July.

The report said durable goods orders tumbled by 7.3 percent in July following a 3.9 percent increase in June. Economists had expected orders to fall by about 4.0 percent.

Excluding a sharp pullback in orders for transportation equipment, durable goods orders fell by a more modest 0.6 percent in July compared to a 0.1 percent increase in the previous month.

While the data raised concerns about the outlook for the manufacturing sector, it also suggests that the Federal Reserve may delay its decision to begin scaling back its stimulus program.

Bernd Weidensteiner, economist for Commerzbank AG said, "While aircraft orders have been especially hard hit, the other details also show broad-based weakness."

"One should, of course, not read too much into volatile order data," he added. "However, this is only the last instance of a certain loss of economic momentum. Tapering in September is therefore not a foregone conclusion."

Economic data is likely to remain in focus on Tuesday, with traders likely to keep an eye on reports on home prices and consumer confidence.