Treasuries Turn Higher After Initial Move To The Downside

After an initial move to the downside, treasuries showed a notable turnaround early in the session on Monday.

Bond prices bounced well off their lows and spent the rest of the day in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.7 basis points to 3.922 percent.

The higher close by treasuries came following the release of mixed U.S. economic data, with traders continuing to look for clues about the outlook for interest rates.

Early in the day, the Commerce Department released a report showing a sharp pullback in new orders for durable goods in the month of January.

The report said durable goods orders plunged by 4.5 percent in January after surging by a downwardly revised 5.1 percent in December.

Economists had expected durable goods orders to tumble by 4.0 percent compared to the 5.6 percent spike that had been reported for the previous month.

The steep drop by durable goods orders came as orders for transportation equipment plummeted by 13.3 percent in January after soaring by 15.8 percent in December.

Excluding orders for transportation equipment, durable goods orders climbed by 0.7 percent in January after falling by 0.4 percent in December. Economists had expected a 0.1 percent uptick.

Meanwhile, the National Association of Realtors released a separate report showing pending home sales in the U.S. spiked by much more than expected in the month of January.

NAR said its pending home sales index soared by 8.1 percent to 82.5 in January after jumping by 1.1 percent to a downwardly revised 76.3 in December.

Economists had expected pending home sales to advance by 1.0 percent compared to the 2.5 percent surge originally reported for the previous month.

Reports on consumer confidence and Chicago-area business activity may attract attention on Tuesday, although trading activity may be somewhat subdued ahead of the release of more closely watched data in the coming days.

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