Treasuries Close Moderately Lower Following Recent Strength

(RTTNews) - After initially showing a lack of direction, treasuries moved moderately lower over the course of the trading session on Monday.

Bond prices bounced back and forth across the unchanged line before sliding more firmly into the red in afternoon trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.1 basis points to 2.766 percent.

With the increase on the day, the ten-year yield regained some ground after ending last Friday's trading at a nearly two-month closing low.

The pullback by treasuries came as traders cashed in on some of the strength seen in the bond market over the past month.

Bond traders may also have been expressing concerns about the likelihood of further tapering by the Federal Reserve.

The Fed is holding a two-day monetary policy meeting beginning on Tuesday, and traders will be closely watching any comments regarding the outlook for its asset purchase program following December's decision to begin scaling back stimulus.

On the economic front, a report from the Commerce Department showed a much steeper than expected drop in new home sales in December.

The report said new home sales tumbled 7.0 percent to an annual rate of 414,000 in December from the revised November rate of 445,000. Economists had expected sales to dip to 455,000 from the 464,000 originally reported for the previous month.

With the steep drop, new home sales pulled back further off the rate of 463,000 seen in October, which was the highest since July of 2008.

Reports on durable goods orders, home prices, and consumer confidence may attract some attention on Tuesday, although traders may be somewhat reluctant to make any significant moves as the Fed meeting gets underway.