(RTTNews) – Government bonds fell sharply in trading on Monday, more than offsetting the previous session’s recovery.
Bond prices fell sharply in early trading and saw further downside in late trading. As a result, the yield on the ten-year benchmark, which moves inversely to the price, rose 10.4 basis points to 4.542 percent.
With the substantial increase on that day, the ten-year yield rose to the highest closing level since October 2007.
The sharp pullback in government bonds came amid lingering concerns about the interest rate outlook following last week’s Federal Reserve meeting.
The Fed left rates unchanged as widely expected, but forecast another rate hike before the end of the year and kept rates at high levels for longer than previously expected.
CME Group’s Fed Watch Tool currently shows a 78.9 percent chance that the Fed will leave rates unchanged at its next meeting in late October/early November, and only a 21.1 percent chance of a one-quarter rate hike point.
Meanwhile, the Fed Watch Tool indicates there is a 61.0 percent chance that the Fed will leave rates unchanged at its December meeting, and that the central bank will raise rates by a quarter point from 34.2 percent.
Later this week, the Commerce Department will release its report on personal income and spending for August, which will include inflation figures that the Fed would prefer.
Reports on consumer confidence, new home sales and durable goods orders could also turn heads in the coming days.
Trading on Tuesday could be affected by reactions to the latest U.S. economic data, including reports on new home sales and consumer confidence.
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