Treasuries Extend Drop With Slightly Lower Close

(RTTNews) - Extending the downward trend seen over the past several sessions, treasuries ended Monday's trading modestly lower.

After coming under pressure in early trading, treasuries regained ground as the day progressed but still closed in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by nearly a basis point to 2.342 percent.

With the slight increase on the day, the ten-year yield closed higher for the eighth time in nine sessions, reaching its highest closing level in well over three months.

The continued weakness among treasuries came amid worries about the outlook for U.S. monetary policy after last Friday's better than expected monthly jobs report.

The Labor Department report said non-farm payroll employment jumped by 271,000 jobs in October, pushing the unemployment down to a seven-year low of 5.0 percent.

The strong job growth is a positive sign for the U.S. economy, but the data also increases the likelihood the Federal Reserve will raise interest rates next month.

Traders were also reacting to the results of the Treasury Department's auction of $24 billion worth of three-year notes.

The three-year note auction drew a high yield of 1.271 percent and a bid-to-cover ratio of 2.82, while the ten previous three-year note auctions had an average bid-to-cover ratio of 3.28.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Trading on Tuesday may be impacted by reaction to U.S. reports on import and exports prices and wholesale inventories.