Lingering fears about inflation and interest rates drove selling at the start of trading, sending yields higher. The move was fairly tentative, however, and bonds remained off a low set on Friday. Bonds recovered a good portion of their early losses during the middle of the day, though there were still mild losses at the close.
The 10-year yield finished at 5.137%, up 1.9 basis points on the day. This was off the peak yield of 5.181% reached on Friday.
There were no major economic data to drive the day`s trading. However, the market looked ahead to key inflation reports due out later in the week. Bonds drifted lower through the past several weeks, spurred on last week by increased fears about interest rates. Recent comments from Fed Chairman Ben Bernanke suggested that a hoped-for rate cut would not take place any time soon.
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