2021.05.1019:33:00UTC+00Treasuries Move To The Downside After Seeing Early Strength

After turning lower over the course of the previous session, treasuries saw further downside during trading on Monday.

Bond priced moved modestly higher in early trading but once again turned negative as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.6 basis points to 1.602 percent.

The pullback by treasuries may have reflected concerns about the outlook for inflation amid increases in commodities prices.

Inflation erodes the value of bonds, and traders also remain concerned faster price growth could lead the Federal Reserve to tighten monetary policy sooner than expected.

The downturn by treasuries came following the substantial volatility that was seen last Friday in reaction to the Labor Department's closely watched monthly jobs report.

The Labor Department said non-farm payroll employment rose by 266,000 jobs in April after surging by a downwardly revised 770,000 jobs in March.

Economists had expected employment to spike by 978,000 jobs compared to the jump of 916,000 jobs originally reported for the previous month.

The report also showed the unemployment rate inched up to 6.1 percent in April from 6.0 percent in March, while economists had expected the unemployment rate to drop to 5.8 percent.

Bond traders initially reacted positively to the report as the weaker than expected data reinforced the view the Federal Reserve will leave ultra-easy monetary policy in place for the foreseeable future.

Buying interest waned over the course of the session, however, as analysts suggested the report may be an aberration and still expect the Fed to begin considering tapering its bond purchases in the coming months.

Trading activity may be somewhat subdued on Tuesday amid another quiet day on the U.S. economic front.