Treasuries Move To The Downside After Seeing Initial Strength

After moving to the upside at the start of trading, treasuries turned lower over the course of the trading day on Monday.

Bond prices pulled back well off their early highs and into negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.1 basis points at 1.623 percent.

The downturn by treasuries may have reflected lingering inflation concerns after last week’s report showing consumer prices increased at their fastest annual rate in over thirty years in October.

The elevated pace of inflation has led to worries that the Federal Reserve might be forced to accelerate its plans to begin tightening monetary policy.

However, the Fed has repeatedly described the factors driving inflation as “transitory” and signaled that it will not be in a hurry to start raising interest rates.

In U.S. economic news, the New York Federal Reserve released a report showing New York manufacturing activity grew strongly in the month of November.

The New York Fed said its general business conditions index jumped to 30.9 in November from 19.8 in October, with a positive reading indicating growth. Economists had expected the index to rise to 21.6.

Meanwhile, the report said firms were less optimistic about the six-month outlook than they were last month, with the index for future business conditions tumbling to 36.9 in November from 52.0 in October.

Trading on Tuesday may be impacted by reaction to some key U.S. economic data, including reports on retail sales and industrial production.

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