Treasuries Close Modestly Lower But Well Off Worst Levels

(RTTNews) - After coming under pressure in early trading on Monday, treasuries regained some ground but still ended the day modestly lower.

Bond prices moved roughly sideways going into the close, stuck just below the unchanged line. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.1 basis points to 2.677 percent.

The early weakness among treasuries was partly due to the release of a report from the National Association of Realtors showing that U.S. pending home sales rebounded by much more than anticipated in the month of March.

NAR said its pending home sales index surged up by 3.4 percent to 97.4 in March after edging down by 0.5 percent to a revised 94.2 in February. Economists had been expecting a much more modest increase of about 0.6 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

With the increase in March, the pending home sales index rose for the first time in nine months, although it was still down by 7.9 percent compared to the same month a year ago.

Selling pressure remained somewhat subdued, however, as traders seemed reluctant to make significant moves ahead of the Federal Reserve's monetary policy announcement on Wednesday as well as the monthly jobs report on Friday.

The subsequent recovery attempt by treasuries was partly due to lingering concerns about the ongoing crisis in Ukraine amid news that the U.S. is imposing new sanctions on several individuals and companies linked to Russian President Vladimir Putin's inner circle.

President Obama acknowledged that the new sanctions may not work and said further Russian aggression towards Ukraine could require less narrowly targeted sectoral sanctions that hit the banking or defense industries.

Reports on home prices and consumer confidence may attract some attention on Tuesday, although bond traders may remain on the sidelines as the two-day Fed meeting gets underway.