Treasuries Close Modestly Lower After Seeing Early Strength

(RTTNews) - After seeing early strength, treasuries pulled back over the course of the trading day on Monday before ending the session modestly lower.

Bond prices drifted lower as the day progressed and ended the session in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 1.4 basis points to 2.2 percent after hitting a low of 2.137 percent.

The early strength among treasuries partly reflected renewed concerns about the Chinese economy after a report from the Financial Times said the government has decided to abandon attempts to boost the stock market through large-scale share purchases.

Senior regulatory officials told the Financial Times China's leaders feel they mishandled their efforts to rescue the stock market.

The Chinese government resumed large-scale stock buying late in the trading day last Thursday to help the Shanghai Composite Index close sharply higher, but officials said the government will refrain from further large-scale buying of equities.

On the U.S. economic front, MNI Indicators released a report showing that business activity in the Chicago area unexpectedly grew at a slower rate in the month of August.

MNI Indicators said its Chicago business barometer dipped to 54.4 in August from 54.7 in July. While a reading above 50 indicates growth, economists had expected the index to inch up to 54.9.

However, traders seemed reluctant to continue buying treasuries amid a spike by the price of crude oil, leading to the subsequent pullback.

Traders may also have been looking ahead to the release of several key U.S. economic reports in the coming days.

The monthly jobs report due on Friday may be the highlight of the week, but traders are also likely to keep an eye on reports on manufacturing and service sector activity, construction spending, and international trade as well as the Federal Reserve's Beige Book.

Trading on Tuesday may be impacted by reaction to reports on national manufacturing activity and construction spending.