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Treasuries Close Flat After Recovering From Early Weakness

After coming under pressure early in the session, treasuries rebounded over the course of the trading day on Monday before closing roughly flat.

Bond prices spent most of the afternoon lingering near the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day unchanged at 1.675 percent.

Treasuries initially moved to the downside in reaction to news that a Treasury Department spokeswoman denied reports the Trump administration is considering delisting Chinese companies from U.S. stock exchanges

"The administration is not contemplating blocking Chinese companies from listing shares on U.S. stock exchanges at this time. We welcome investment in the United States," Treasury spokeswoman Monica Crowley said in a statement.

Crowley's statement comes on the heels of reports suggesting the administration is contemplating ways to curb U.S. investments in China.

White House trade adviser Peter Navarro attacked the media reports in an interview with CNBC on Monday, claiming "over half" of a Bloomberg report about potential restrictions was "highly inaccurate or simply flat-out false."

"This story was just so full of inaccuracies and in terms of the truth of the matter, what the Treasury said I think was accurate," Navarro said.

Better than expected manufacturing data out of China also tempered some of the recent concerns about the impact of the U.S.-China trade war.

However, treasuries rebounded as MNI Indicators released a report showing Chicago-area business activity unexpectedly returned to contraction in the month of September.

MNI Indicators said its Chicago business barometer slumped to 47.1 in September after rebounding to 50.4 in August. A reading below 50 indicates a contraction in Chicago-area business activity.

The index indicated a contraction for the third time in four months, while economists had expected a much more modest decrease to a reading of 50.2.

MNI Indicators said its reading on prices at the factory gate rose 4.1 points to 57.7 in third quarter, with anecdotal evidence pointing to tariffs affecting prices and business activity.

Reports on manufacturing activity and construction spending may attract some attention on Tuesday, although trading activity may be somewhat subdued ahead of the release of the more closely watched monthly jobs report on Friday.

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