Ten-Year Yield Pulls Back To Lowest Level In Over Two Months

(RTTNews) - Following the notable pullback seen during last Friday's session, treasuries showed a strong move back to the upside during trading on Monday.

Bond prices moved higher in early trading and climbed more firmly into positive territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 8.3 basis points to 4.389 percent.

The ten-year yield more than offset the increase seen in the previous session, falling to its lowest closing level in over two months.

The rebound by treasuries came as traders continued to express optimism about the outlook for interest rates ahead of the release of some key economic data in the coming days.

The Commerce Department's report on personal income and spending may be in the spotlight, as it includes readings on inflation said to be preferred by the Federal Reserve.

Economists currently expect the report to show the annual rate of consumer price growth slowed to 3.1 percent in October from 3.4 percent in September. Core price growth is expected to slow to 3.5 percent from 3.7 percent.

Traders are also likely to keep an eye on reports on consumer confidence, weekly jobless claims, pending home sales and manufacturing activity.

The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, may also attract attention along with remarks by Fed Chair Jerome Powell.

Treasuries saw further upside after the Treasury Department announced the results of this month's auctions of $54 billion worth of two-year notes and $55 billion worth of five-year notes.

The two-year note auction drew a high yield of 4.887 percent and a bid-to-cover ratio of 2.54, while the five-year note auction drew a high yield of 4.420 percent and a bid-to-cover ratio of 2.46. The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

On Tuesday, the Treasury is scheduled to announce the results of this month's auction of $39 billion worth of seven-year notes.

Trading on Tuesday may also be impacted by reaction to reports on home prices and consumer confidence as well as remarks by several Fed officials.