WASHINGTON (dpa-AFX) - Treasuries moved modestly higher over the course of the trading session on Monday, although buying interest was somewhat subdued.
Bond prices rebounded after seeing initial weakness but pulled back off their best levels in late-day trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by nearly a basis point to 2.744 percent.
The modest strength among treasuries came amid weakness on Wall Street following disappointing earnings news from heavy equipment maker Caterpillar (CAT).
Lower revenue guidance form Nvidia (NVDA) also weighed on stocks, with the graphics chip maker citing deteriorating macroeconomic conditions, particularly in China.
However, traders seemed reluctant to make significant moves ahead of key events later this week, including the release of the Labor Department's closely watched monthly jobs report on Friday.
The Federal Reserve's monetary policy decision on Wednesday is also likely to attract attention, although the central bank is widely expected to leave interest rates unchanged after last month's rate hike.
Traders are also likely to watch closely for any news regarding a new round of trade talks between U.S. and Chinese officials in Washington this week.
Meanwhile, the Treasury Department's auction of $40 billion worth of two-year notes attracted below average demand.
The two-year note auction drew a high yield of 2.600 percent and a bid-to-cover ratio of 2.56, while the ten previous two-year note auctions had an average bid-to-cover ratio of 2.68.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
A separate Treasury auction of $41 billion worth of five-year notes also attracted slightly below average demand.
The five-year note auction drew a high yield of 2.576 percent and a bid-to-cover ratio of 2.41, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.48.
Looking ahead, the Treasury is due to finish off this week's series of long-term securities auctions with the sale of $32 billion worth of seven-year notes on Tuesday.
Trading on Tuesday may also be impacted by reaction to reports on consumer confidence and home prices in major metropolitan areas.
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