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Treasuries Move Notably Lower Despite Disappointing U.S. Economic Data

Treasuries showed a notable move to the downside during trading on Monday, with traders shrugging off some disappointing U.S. economic data.

Bond prices came under pressure early in the session and remained firmly negative throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6 basis points to 1.836 percent.

The initial weakness among treasuries came in reaction to upbeat Chinese manufacturing data, which helped alleviate concerns about the impact of the ongoing U.S.-China trade dispute.

Survey data from IHS Markit showed Chinese manufacturing activity expanded at a moderate pace in November, with growth reaching its strongest level since December 2016.

The Caixin manufacturing Purchasing Managers' Index rose slightly to 51.8 from 51.7 in October, signaling an improvement for the fourth consecutive month.

Treasuries regained some ground after a report from the Institute for Supply Management showed a continued contraction in U.S. manufacturing activity in the month of November, but buying interest remained subdued.

The ISM said its purchasing managers index edged down to 48.1 in November from 48.3 in October, with a reading below 50 indicating a contraction in manufacturing activity. Economists had expected the index to inch up to 49.2.

"November was the fourth consecutive month of PMI contraction, at a faster rate compared to the prior month," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee. "Global trade remains the most significant cross-industry issue."

A separate report released by the Commerce Department showed an unexpected decrease in U.S. construction spending in the month of October.

Trading activity may be relatively light on Tuesday, with a lack of major U.S. economic data keeping some traders on the sidelines.

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