Treasuries ended Monday's trading modestly higher, regaining some ground after moving sharply lower over the course of the previous session.
Bond prices moved notably higher in morning trading but pulled back well off their best levels going into the close of trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day down by 1.9 basis points at 1.558 percent.
With the modest drop on the day, ten-year yield partly offset the 9.9 basis point gain it posted last Friday following the release of relatively upbeat U.S. jobs data.
The modest strength among treasuries came as some traders used the weakness seen in the previous session at an opportunity to get into the bond markets.
Lingering concerns about Europe contributed to the continued appeal of U.S. bonds, with Italian Prime Minister Mario Monti warning that Europe is facing the threat of a psychological disintegration and urging all leaders to become more independent from their parliaments.
In an interview with German magazine Der Spiegel that was published Sunday, Monti said the debt crisis risks the future of the single-currency bloc.
However, the buying interest was partly offset by news that Greece and its international creditors have agreed on the need to strengthen policy efforts and meet the country's bailout conditions. The lenders are set to resume discussions with Greek authorities in early September.
With Tuesday marking another light day on the U.S. economic calendar, traders are likely to keep an eye on comments by Federal Reserve Chairman Ben Bernanke.
Bernanke is scheduled to host a town hall event with educators from across the country and will take questions after delivering prepared remarks.
Investors are likely to pay close attention to the question-and-answer portion, hoping that the Fed chief will address the state of the economy and the outlook for monetary policy.
Bond trading could also be impacted by the release of the results of the Treasury Department's auction of $32 billion worth of three-year notes.
by RTT Staff Writer
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