Treasuries Move To The Downside As Inflation Data Looms

After ending the previous session little changed, treasuries moved to the downside over the course of the trading day on Monday.

Bond prices moved lower early in the session and remained in the red throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 3.0 basis points to 4.288 percent.

The weakness among treasuries came as traders looked ahead to the release of consumer price inflation data later in the week.

The Labor Department’s report on consumer price inflation in the month of August could have a significant impact on the outlook for interest rates.

Economists currently expect the annual rate of consumer price growth to accelerate to 3.6 percent in August from 3.2 percent in July, while the annual rate of core consumer price growth is expected to slow to 4.4 percent from 4.7 percent.

Ahead of the data, CME Group’s FedWatch Tool is currently indicating a 93.0 percent chance the Federal Reserve will leave interest rates unchanged next week.

The outlook for November is a little more uncertainty, however, with the FedWatch Tool indicating a 54.5 percent chance rates will remain unchanged and a 42.6 percent chance of another quarter point rate hike.

Bond traders largely shrugged off a report from the Wall Street Journal suggesting a shift in Federal Reserve officials’ stance on rates.

Fed insider Nick Timiraos said the central bank is likely to pause its recent series of rate hikes next week then take a “harder look at whether more are needed.”

While Timiraos said some Fed officials to still prefer to err on the side of raising rates too much, other see risks as more balanced and worry about unnecessarily causing a downturn or triggering financial turmoil.

Trading activity may be somewhat subdued on Tuesday as traders await the release of the highly anticipated consumer price inflation report on Wednesday.

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