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Treasuries Show Notable Move Back To The Downside

Following the rebound seen over the course of the previous session, treasuries showed a notable move back to the downside during trading on Monday.

Bond prices came under pressure in morning trading and remained firmly negative throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 7.2 basis points to 1.622 percent.

The weakness among treasuries partly reflected reflects optimism about further stimulus from global central banks, with the European Central Bank expected to cut interest rates at a meeting on Thursday.

Expectations for another interest rate cut by the U.S. Federal Reserve next week were also bolstered by last Friday's weaker than expected jobs data.

Data from China showing an unexpected drop in exports in August has also added to the hopes of more stimulus to stave off a global recession.

Official data showed Chinese exports in August unexpectedly fell by 1 percent compared to year ago, reflecting the ongoing trade dispute with the U.S.

Subsequently, the trade war also remained on investors' minds, although traders seem optimistic about high-level trade talks scheduled for next month.

Some political observers have suggested President Donald Trump may soften his stance on China in order to reach an agreement and prevent a U.S. recession just before Election Day.

Looking ahead, trading on Tuesday may be impacted by reaction to the results of the Treasury Department's auction of $38 billion worth of three-year notes.

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