Treasuries Close Nearly Flat Following Choppy Trading Day

(RTTNews) - Treasuries showed a lack of direction throughout the trading day on Monday before eventually ending the session nearly flat.

Bond prices spent the day bouncing back and forth across the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.597 percent.

The choppy trading on the day came as traders weighed worries about the deteriorating security situation in Iraq against a batch of upbeat U.S. economic data.

Some buying interest was generated by bond's safe haven appeal amid the ongoing Sunni insurgency taking place across Iraq.

Reflecting the seriousness of the situation, Secretary of State John Kerry suggested that the U.S. would be willing to work with long-time rival Iran to address the escalating violence.

The move comes amid the insurgents' claims of mass executions of Iraqi soldiers, which State Dept. Spokesperson Jen Psaki described as "horrifying and a true depiction of the bloodlust that these terrorists represent."

On Friday, President Barack Obama stated that he will not send U.S. troops back into combat in Iraq but said his national security team is preparing a range of other options.

However, bond traders were also presented with better than expected readings on New York manufacturing activity, industrial production, and homebuilder confidence.

Early in the day, the New York Federal Reserve said its general business conditions index inched up to 19.3 in June from 19.0 in May, with a positive reading indicating growth in regional manufacturing activity.

The modest uptick came as a surprise to economists, who had been expecting the index to drop to a reading of 15.0.

The Federal Reserve released a separate report showing that industrial production increased by 0.6 percent in May following a revised 0.3 percent decrease in April. Economists had expected production to climb by about 0.5 percent.

Additionally, the National Association of Home Builders released a report showing that homebuilder confidence has improved by more than expected in the month of June.

The report showed that the NAHB/Wells Fargo Housing Market Index climbed to 49 in June from 45 in May. Economists had expected the index to edge up to 47.

The lackluster performance by bonds may also reflect traders staying on the sidelines ahead of the Fed's monetary policy announcement on Wednesday.

While reports on consumer prices and housing starts may attract some attention on Tuesday, trading activity may remain subdued as the Fed decision looms.