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Treasuries Edge Lower After Recent Upward Move

After trending higher over the past few sessions, treasuries showed a modest move back to the downside during trading on Monday.

Bond prices moved lower early in the session and remained stuck in negative territory throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.8 basis points to 2.643 percent.

The pullback by treasuries came following the release of a report from the Commerce Department showing an unexpected uptick in U.S. retail sales in January.

The Commerce Department said retail sales rose by 0.2 percent in January after tumbling by a revised 1.6 percent in December.

Economists had expected retail sales to come in unchanged compared to the 1.2 percent slump originally reported for the previous month.

Excluding a steep drop in auto sales, retail sales climbed by 0.9 percent in January after plummeting by a revised 2.1 percent in December.

Ex-auto sales had been expected to increase by 0.3 percent compared to the 1.8 percent plunge originally reported for the previous month.

Closely watched core retail sales, which exclude autos, gasoline, building materials and food services, also jumped by 1.1 percent in January after plunging by 2.3 percent in December.

A separate Commerce Department reported showed business inventories increased in line with economist estimates in the month of December.

Meanwhile, traders largely shrugged off the results of the Treasury Department's auction of $38 billion worth of three-year notes, which attracted slightly below average demand.

The three-year note auction drew a high yield of 2.448 percent and a bid-to-cover ratio of 2.56, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.61.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Trading on Tuesday may be impacted by reaction to the Labor Department's closely watched report on consumer price inflation in the month of February.

Bond traders are also likely to keep an eye on the results of the Treasury's auction of $24 billion worth of ten-year notes.

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