Treasuries Lower Before Inflation Data

The market digested a weak manufacturing report and surprising strength in construction spending

From Standard & Poor's Equity Research

Treasuries closed up slightly, as a pullback in yields that occurred late Friday extended down this morning before a mild recovery from session lows in the afternoon. The market digested a weak September ISM report and surprising strength in construction spending.

The 10-year note rose 04/32 to 102-03/32 for a yield of 4.61%. The 30-year bond firmed 03/32 to 95-00/32 for a yield of 4.75%.

Profit taking last week brought bonds off recent highs, but the intermediate-term uptrend that began in July is preventing sellers from gaining the upper hand. Bond price strength over the past three months reflects concerns of an economic slowdown and speculation the Fed will start easing interest rates by early next year. Equities were trading lower as the bond market closed. Crude oil futures fell sharply.

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