Treasuries Pullback Sharply Ahead Of Influx Of Supply

(RTTNews) - Following the rebound seen over the two previous sessions, treasuries showed a substantial move back to the downside during trading on Monday.

After moving modestly lower in early trading, bond prices declined steadily throughout much of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, shot up by 12.4 basis points to 2.274 percent.

With the sharp jump on the day, the ten-year yield more than offset the drops seen in the two previous sessions to reach its highest closing level in over five months.

The steep pullback by treasuries was partly due to continued weakness among European bonds, which have come under pressure even as the European Central Bank continues its program of government debt purchases.

Bond traders were also looking ahead to an influx supply, with the Treasury Department due to auction three-year and ten-year notes and thirty-year bonds in the coming days.

The Treasury is due to sell $24 billion worth of three-year notes on Tuesday, $24 billion worth of ten-year notes on Wednesday, and $16 billion worth of thirty-year bonds on Thursday.

Economic data is also likely to move back into the spotlight later in the week, with traders likely to keep an eye on reports on retail sales, producer prices, and industrial production.

The Federal Reserve has indicated that its monetary policy decisions will be data-dependent, although most analysts believe the first rate hike will continue to be delayed.

Tuesday represents another quiet day on the economic front, although trading could be impacted by the results of the three-year note auction.