Treasuries Close Little Changed As Early Buying Interest Fades

After a notable move to the upside early in the session, treasuries gave back ground over the course of the trading day on Monday.

Bond prices pulled back well off their best levels of the day, ending the session roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 4.015 percent after hitting a low of 3.910 percent.

With the uptick on the day, the ten-year yield ended the session at its highest closing level in over fourteen years.

Treasuries initially benefited from news the U.K. government is reversing course on previously announced fiscal plans that contributed to turmoil in the global bond markets.

Britain’s new finance minister Jeremy Hunt reversed almost all of the tax measures announced by his predecessor Kwasi Kwarteng in the mini-budget on September 23.

“We remain completely committed to our mission to go for growth, but growth requires confidence and stability – which is why we are taking many difficult decisions, starting today,” Hunt said in a speech to the House of Commons.

Hunt scrapped the plan to cut the basic rate of income tax to 19 percent beginning in April 2023. The government aims to proceed with the cut in due course, but this will only take place when economic conditions allow for it and a change is affordable, the Treasury said in a statement.

Buying interest waned over the course of the session, however, as concerns about the outlook for interest rates continued to weigh on treasuries.

On the economic front, the Federal Reserve Bank of New York released a report showing regional manufacturing activity has contracted by more than expected in the month of October.

The New York Fed said its general business conditions index slid to a negative 9.1 in October from a negative 1.5 in September, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to dip to a negative 4.0.

Trading on Tuesday may be impacted by reaction to the latest economic data, including reports on industrial production and homebuilder confidence.

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