Treasuries Show Strong Move Back To The Upside

(RTTNews) - Following the steep drop seen last Friday, treasuries showed a strong move back to the upside over the course of the trading session on Monday.

Bond prices finished the day firmly in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slumped by 6.9 basis points to 1.566 percent.

The rebound by treasuries came following the release of a report from the Commerce Department showing that income and spending rose in line with economist estimates in the month of July.

The report said personal income climbed by 0.4 percent in July after rising by 0.3 percent in June. The increase in income matched economist estimates.

The Commerce Department also said personal spending rose by 0.3 percent in July following a 0.5 percent increase in June. The spending growth also met expectations.

A closely watched reading on inflation showed that core consumer prices, which exclude food and energy prices, were up 1.6 percent year-over-year in July, unchanged from the previous month.

"That lack of acceleration in core inflation is a factor that could persuade Fed officials to delay the next interest rate hike until December," said Steve Murphy, U.S. economist at Capital Economics.

Trading on Tuesday may be impacted by reaction to reports on home prices in major metropolitan areas and consumer confidence.