Treasuries Move Back To Upside Amid Worries About Hong Kong

(RTTNews) - After bucking their recent uptrend in the previous session, treasuries moved back to the upside during trading on Monday.

Bond prices moved higher in early trading and remained firmly positive throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.4 basis points to 2.491 percent.

With the drop on the day, the ten-year yield closed lower for the fifth time in seven sessions, hitting a nearly three-week closing low.

The strength among treasuries was largely due to concerns about the impact of protests by pro-democracy activists in Hong Kong.

People in Hong Kong have been protesting against Chinese authorities in an effort to gain more independence from mainland China.

However, Flemming Nielsen, senior analyst at Danske Bank, said the most likely outcome is that the political crisis in Hong Kong stays local.

"In our view, both the Chinese leadership and the opposition in Hong Kong including Occupy Central have an interest in not letting the crisis get out of control," Nielsen said.

He added, "The Chinese leadership does not want to discredit the 'one country, two systems' political model and the opposition in Hong Kong does not want to alienate the majority of the Hong Kong population that is concerned about stability."

Traders were also presented with a mixed U.S. economic data, including better than expected personal spending data and a report showing a bigger than expected drop in pending home sales.

Before the start of trading, the Commerce Department released a report showing that personal spending rose by slightly more than expected in the month of August.

The report said personal spending increased by 0.5 percent in August, while revised data showed that spending was unchanged in July. Economists had expected spending to increase by about 0.4 percent.

The Commerce Department also said personal income rose by 0.3 percent in August after edging up by 0.2 percent in July. The increase in income matched economist estimates.

Meanwhile, a separate report released by the National Association of Realtors said pending home sales pulled back by much more than expected in the month of August.

NAR said its pending home sales index fell 1.0 percent to 104.7 in August after jumping 3.2 percent to 105.8 in July. Economists had been expecting pending home sales to drop by about 0.5 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.

While developments overseas are likely to remain in focus on Tuesday, traders are also likely to keep an eye on reports on home prices, consumer confidence and Chicago-area business activity.