FX.co ★ Treasuries Regain Ground After Last Friday's Sell-Off

Following the steep drop seen in the previous session, treasuries regained some ground during the trading day on Monday.

Bond prices moved to the upside early in the session and remained firmly positive throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.5 basis points to 2.765 percent.

The rebound by treasuries may partly have reflected bargain hunting, with the ten-year yield giving back ground after spiking by 16.4 basis points to a two-week high last Friday.

Treasuries may also have benefited from their appeal as a safe haven amid lingering concerns about the economy, inflation and interest rates.

Trading activity was somewhat subdued, however, as traders looked ahead to the release of some key U.S. economic data in the coming days.

Economists have suggested that the inflation data could have an even greater impact on Fed officials' thinking than last week's much stronger than expected jobs data.

A report on labor productivity and costs in the second quarter may attract some attention on Tuesday, although trading activity may remain light ahead of the release of consumer price inflation data on Wednesday.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of $42 billion worth of three-year notes.