Ten-Year Yield Reaches Eleven-Year High

After an early move to the downside, treasuries regained ground over the course of the trading day on Monday but remained in negative territory.

Bond prices recovered from their early lows and spent the afternoon lingering in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.2 basis points to 3.490 percent.

The ten-year yield gave back ground after reaching an intraday high of 3.510 percent but still ended the session at an eleven-year closing high.

The initial weakness among treasuries reflected lingering concerns about the outlook for interest rates ahead of the Federal Reserve’s monetary policy decision on Wednesday.

The Fed is widely expected to raise interest rates by another 75 basis points, although some see an outside chance for a 100 basis point rate hike.

CME Group’s FedWatch Tool is currently indicating an 82.0 percent chance of a 75 basis points rate hike and a 18.0 percent chance of a 100 basis point rate hike,

A number of other major central banks around the world are also scheduled to announce their latest monetary policy decisions this week, including the Bank of England and the Bank of Japan.

Meanwhile, traders largely shrugged off a report from the National Association of Home Builders showing U.S. homebuilder confidence declined for the ninth consecutive month in September.

The report showed the NAHB/Wells Fargo Housing Market Index slid to 46 in September from 49 in August. Economists had expected the index to edge down to 48.

With the bigger than expected decrease, the housing market index dropped to its lowest level since hitting 45 in May 2014.

A report on new residential construction in the U.S. may attract some attention on Tuesday, although trading activity is likely to be somewhat subdued ahead of the Fed announcement on Wednesday.

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