Treasuries Regain Ground Following Last Friday's Pullback

(RTTNews) - Treasuries moved back to the upside during trading on Monday, regaining ground following the notable pullback seen during last Friday's session.

Bond prices moved higher early in the session and remained in positive territory throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell 2.7 basis points to 4.034 percent.

The ten-year yield partly offset the 5.0 basis point jump seen in the previous session but remains above the five-month closing low set last Thursday.

The rebound by treasuries came as traders continued to look ahead to the Federal Reserve's monetary policy announcement on Wednesday.

With recent data showing relatively subdued inflation and a weakening labor market, the Fed is widely expected to lower interest rates by at least a quarter point.

CME Group's FedWatch Tool is currently indicating a 96.0 percent chance the Fed will cut rates by 25 basis points and a slim 4.0 percent chance of a half-point rate cut.

Traders are likely to pay close attention to the Fed's accompanying statement as well as Fed Chair Jerome Powell's post-meeting comments for clues about the likelihood of further rate cuts.

Currently, the Fed is widely expected to lower rates by another 25 basis points at both its October and December meetings, although Powell is likely to say future rate cuts will depend on incoming economic data.

While trading on Tuesday may be impacted by reaction to reports on retail sales, industrial production and import and export prices, activity is likely to be somewhat subdued ahead of the Fed's monetary policy announcement on Wednesday.