Treasuries Close Modestly Lower But Well Off Worst Levels

(RTTNews) - Treasuries saw modest weakness during trading on Monday, extending the downward trend seen over the past few weeks.

After coming under pressure in early trading, bond prices regained some ground but still closed in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.3 basis points to 2.348 percent.

The early weakness among treasuries came following the release of a report from the Institute for Supply Management showing that U.S. manufacturing activity unexpectedly grew at a faster pace in the month of October.

The ISM said its index of manufacturing activity climbed to 59.0 in October from 56.6 in September, with a reading above 50 indicating growth in the sector. The increase came as a surprise to economists, who had expected the index to dip to 56.0.

With the unexpected increase, the manufacturing index matched the reading reported for August, which is the highest reading for the index since March of 2011.

Selling pressure waned over the course of the session, however, as traders seemed reluctant to make any significant moves ahead of tomorrow's midterm elections.

In the elections, Republicans are expected to increase their majority in the House and potentially retake control of the Senate.

Traders were also looking ahead to the release of some key economic data later in the week, including the closely watched monthly jobs report.

On Tuesday, trading could be impacted by reaction to reports on the U.S. trade deficit and new orders for manufactured goods.