Treasuries Give Back Ground Following Recent Strength

(RTTNews) - After trending higher over the past few sessions, treasuries gave back some ground over the course of the trading day on Monday.

Bond prices came under pressure in early trading and remained stuck in the red throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.2 basis points to 1.923 percent.

The pullback by treasuries came as traders cashed in the upward move seen in reaction to the Federal Reserve's monetary policy announcement last Wednesday.

The Fed was perceived as dovish, as the revised forecast for interest rates showed that officials now expect only two rate hikes by the end of this year compared to the four predicted back in December.

Traders were also reacting to comments by Richmond Fed President Jeffrey Lacker, who spoke about the outlook for inflation in a speech in Paris.

Lacker said he is "reasonably confident" that inflation will move back to the Fed's 2 percent target over the medium term.

Meanwhile, traders largely shrugged off a report from the National Association of Realtors showing a much sharper than expected pullback in existing home sales in February.

NAR said existing home sales tumbled 7.1 percent to an annual rate of 5.08 million in February from 5.47 million in January. Economists had expected sales to show a more modest decrease to a rate of 5.31 million.

Despite the steep monthly decline, the report noted that existing home sales were up by 2.2 percent compared to the same month a year ago.

NAR chief economist Lawrence Yun said, "The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February's lack of closings."

"However, the main issue continues to be a supply and affordability problem," he added. "Finding the right property at an affordable price is burdening many potential buyers."

The economic calendar for Tuesday is relatively quiet, although traders are likely to keep an eye on Markit's preliminary reading on its manufacturing index for March.