Treasuries Close Nearly Flat After Late-Day Pullback

(RTTNews) - After seeing modest strength for much of the session on Monday, treasuries gave back ground going into the close to end the day nearly flat.

Bond prices hovered in positive territory until the late-day pullback. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.623 percent after hitting a low of 2.59 percent.

The early strength among treasuries was partly due to a report from Markit showing an unexpected slowdown in the pace of growth in business activity in the Eurozone.

Markit said its Flash Eurozone PMI Composite Output Index fell to 52.8 in June from 53.5 in May, although a reading above 50 indicates growth. Economists had expected the index to come in unchanged.

Meanwhile, traders largely shrugged off the release of a separate report from the National Association of Realtors showing a bigger than expected increase in U.S. existing home sales in the month of May.

NAR said existing home sales jumped 4.9 percent to a seasonally adjusted annual rate of 4.89 million in May from an upwardly revised 4.66 million in April.

Economists had expected existing home sales to climb to an annual rate of 4.75 million from the 4.65 million originally reported for the previous month.

The late-day pullback by treasuries may have reflected uncertainty ahead of the release of key data later in the week.

The personal income and spending report includes a reading on inflation that is favored by the Federal Reserve and is likely to be in focus in light of recent reports showing notable price growth.

Trading on Tuesday may be impacted by the day's batch of economic data, including reports on home prices, new home sales, and consumer confidence.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of $30 billion worth of two-year notes.