Treasuries See Further Downside Amid Focus On Debt Ceiling Negotiations

(RTTNews) - Following the notable pullback seen in the previous session, treasuries saw further downside during trading on Monday.

Bond prices came under pressure early in the trading day and remained firmly negative throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.5 basis points to 3.508 percent.

The continued weakness among treasuries may have partly reflected optimism about an eventual agreement on raising the U.S. debt following comments from Treasury Secretary Janet Yellen.

In an interview with the Wall Street Journal, Yellen said the administration and congressional Republicans are making progress in their negotiations over federal spending and raising the debt limit.

"I'm hopeful. I think the negotiations are very active. I'm told they have found some areas of agreement," Yellen said in an interview following a meeting of G-7 finance ministers in Japan on Saturday.

President Joe Biden also expressed optimism about the talks in remarks to reporters over the weekend, although House Speaker Kevin McCarthy, R-Calif., told NBC News on Monday that the two sides are still "far apart."

"It seems like they want to look like they're in a meeting," McCarthy said outside the Capitol. "They're not talking anything serious."

Overall trading activity remained somewhat subdued, however, as traders looked ahead to the release of some key economic data in the coming days.

Remarks by Federal Reserve officials are also likely to attract attention this week, with Fed Chair Jerome Powell due to participate in a Perspectives on Monetary Policy panel before the Thomas Laubach Research Conference on Friday.

The New York Fed released a report this morning showing a substantial downturn in regional manufacturing activity in the month of May.

The report said the general business conditions index plunged to a negative 31.8 in May from a positive 10.8 in April, with a negative reading indicating a contraction. Economists had expected the index to drop to a negative 2.5.

News regarding the debt ceiling negotiations may attract attention on Tuesday, while traders are also likely to keep an eye on reports on retail sales and industrial production.