Treasuries Climb Well Off Worst Levels But Still Close Lower

Treasuries showed a moderate move to the downside during trading on Monday but closed well off their worst levels of the day.

After coming under pressure early in the session, bond prices regained some ground as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.7 basis points to 2.858 percent after reaching a high of 2.877 percent.

The early weakness among treasuries came following the release of a report from the Commerce Department showing retail sales in the U.S. increased in line with economist estimates in the month of June.

The report said retail sales climbed by 0.5 percent in June after soaring by an upwardly revised 1.3 percent in May. Economists had expected sales to rise by 0.5 percent compared to the 0.8 percent increase originally reported for the previous month.

Excluding a jump in auto sales, retail sales still rose by 0.4 percent in June following a 1.4 percent spike in May. The increase in ex-auto sales also matched economist estimates.

A separate report from the Federal Reserve Bank of New York showed New York manufacturing activity continued to grow at a fairly brisk pace in July, although the pace of growth slowed from the previous month.

While the New York Fed said its general business conditions index dipped to 22.6 in July from 25.0, a positive reading still indicates growth in regional manufacturing activity. Economists had expected the index to drop to 22.0.

The Commerce Department also released a report showing business inventories increased in line with economist estimates in the month of May.

However, traders seemed somewhat reluctant to make any significant moves ahead of Federal Reserve Chairman Jerome Powell's testimony before the Senate Banking Committee on Tuesday.

Trading on Tuesday could also be impacted by reaction to reports on industrial production in June and homebuilder confidence in July.

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