Treasuries Climb Off Worst Levels But Still Close Lower

After coming under pressure early in the session, treasuries regained some ground over the course of the trading day on Monday.

Bond prices climbed well off their worst levels of the day but still closed in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.7 basis points to 1.751 percent after reaching a high of 1.806 percent.

The early weakness among treasuries came as the recent surge in oil prices has added to concerns about the outlook for inflation.

The price of crude oil reached a nearly fourteen-year high above $130 a barrel overnight amid the ongoing Russian assault on Ukraine.

Secretary of State Antony Blinken said on NBC’s “Meet the Press” on Sunday that the U.S. and European partners are in “active discussions” about banning the import of Russian oil in response to the invasion of Ukraine.

Higher crude oil prices are already impacting prices at the pump, with AAA saying the national average for a gallon of gas has reached a fourteen-year high of $4.065.

The spike in oil prices may push inflation even higher, forcing the Federal Reserve to more aggressively raise interest rates.

However, treasuries regained ground as the day progressed, as bonds continued to benefit from their appeal as a safe haven.

Developments in Ukraine and the oil markets are likely to remain in focus on Tuesday, overshadowing reports on the U.S. trade deficit and wholesale inventories.

Bond traders are also likely to keep an eye on the results of the Treasury Department’s auction of $48 billion worth of three-year notes.

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