US Treasury Markets
11/2/2009 3:37 PM ET
(RTTNews) -
Treasuries fell on Monday, as the day's largely positive data on housing, manufacturing and construction spending drove traders to sell bonds, while some comments from the Fed regarding the current state of the financial system moderated the losses.
The benchmark ten-year yield fluctuated between gains and losses for the majority of the session but finished lower as risk aversion abated near the end of the trading session. Subsequently, the yield on the note, which moves opposite of its price, finished at 3.422 percent, posting a gain of 3.0 basis points.
Last week, the ten-year yield fell by 8.3 basis points, as renewed questions about the economic recovery and a string of largely successful offerings from the Treasury Department boosted buying interest.
On the economic front, the Institute for Supply Management released its report on manufacturing activity in the month of October, showing that activity expanded for the third consecutive month amid a jump in production and employment.
The ISM said its index of activity in the manufacturing sector rose to 55.7 in October from 52.6 in September, with a reading above 50 indicating growth in the sector. Economists had been expecting a more modest increase by the index to a reading of 53.0.
Additionally, pending home sales rose for a record straight eighth month in September, according to a report released by the National Association of Realtors, with the pending home sales index rising to its highest level since December of 2006.
The headline pending home sales index rose 6.1 percent to 110.1 in September from a reading of 103.8 in August. The increase in the index came as a surprise to economists, who had expected the index to edge down 0.1 percent.
Separately, the U.S. Commerce Department revealed that construction spending rose 0.8 percent in September, following a 0.1 percent decline in August and a 1.2 percent slide in July.
Amid the influx of economic data, Federal Reserve Governor Daniel Tarullo remarked that even though the economy has begun to show signs of life, the outlook on the magnitude of the recovery should be cautiously optimistic.
Meanwhile, Jon Greenlee, associate director of the Fed's division of banking supervision and regulation revealed concerns over the state of the financial system, stating that the U.S. banking system is "far from robust," moderating some of the sell-off in the bond market.
by RTT Staff Writer
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