Treasuries Close Notably Higher On Disappointing Overseas Data

(RTTNews) - After ending last Friday's trading firmly in the red, treasuries showed a strong move back to the upside during trading on Monday.

Bond prices moved steadily higher for much of the session before giving back some ground going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5 basis points to 2.257 percent.

The strength among treasuries was partly due to renewed worries about the outlook for the global economy following some disappointing data from overseas.

A revised report released by Japan's Cabinet Office showed that Japanese GDP contracted by 1.9 percent year-over-year in the third quarter, faster than the 1.6 percent drop initially estimated and the 0.5 percent decline expected by economists.

The Chinese Customs Office released a separate report showing that the Chinese trade surplus jumped to $54.5 billion in November from $45.4 billion in October.

The wider trade surplus reflected a drop in the value of Chinese imports, which fell an annual 6.7 percent in November compared to expectations for a 3.9 percent increase.

The report also said Chinese rose by 4.7 percent year-over-year in November compared to an 11.6 percent jump in October and expectations for 8.2 percent growth.

Julian Evans-Pritchard, China Economist at Capital Economics, said, "Despite today's data, we still expect exports to fair reasonably well going forward given that global growth looks set to continue to recover next year."

"In contrast, import growth is likely to remain weak given the ongoing structural slowdown in investment," he added.

The focus on overseas data came amid a lack of major U.S. economic data on the day, although some key reports are due to be released later in the week.

While the Commerce Department is scheduled to release its monthly report on wholesale trade on Tuesday, the data does not typically attract much attention.

Bond traders are likely to focus on the results of the Treasury Department's auction of $25 billion worth of three-year notes.