US Treasurys higher ahead of Fed, key earnings

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U.S. sovereign bonds traded higher on Monday ahead of the Federal Reserve's two-day policy meeting this week and a raft of major corporate earnings.

Benchmark 10-year Treasury yields were lower, trading around 2.0540 percent, having closed at about 2.08 on Friday. This after hitting a two-week high Friday following a rate cut by China's central bank.


Meanwhile, 30-year Treasury yields dipped to 2.8657 percent after finishing at 2.898 percent Friday.

Key data releases included new home sales for September, which fell 11.5 percent to an annualized rate of 468,000.

"For all the talk of low inventories of existing homes (which there certainly is), builders can't find enough warm bodies to build the homes which in turn raises labor costs and the ultimate price of the house which in turn leads to the 1st time buyer to rent instead of buy notwithstanding the strong rate of rent increases," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.

The Dallas Federal Reserve Survey business activity index came in at -12.7.

As for the Fed, it could tweak its language slightly when it releases its post-meeting statement Wednesday.

Many economists now expect a December rate hike if the economy does not slow significantly.

The People's Bank Of China (PBOC) headquarters stand at night in the financial district of Beijing, China.
PBOC: Our big easing nothing like ECB's, Fed's QE

Central bank policy has taken center stage in the last week as European Central Bank chief Mario Draghi hinted at extending the central bank's 1 trillion euro bond-buying program last week and China cut rates in a surprise move on Friday.

The People's Bank of China said it was lowering its one-year benchmark bank lending rate by 25 basis points to 4.35 percent as part of China's most aggressive monetary-easing policy since the 2008-2009 global financial crisis.

Throughout the week, traders will also be keeping an eye on the flow of earnings news, which will pick up with reports from Big Oil, like Exxon Mobil and Chevron, and drugmakers, Merck, Pfizer and Bristol-Myers.

Apart from corporate releases, the first look at third-quarter GDP (gross domestic product) is on Thursday, and economists are looking for growth of about 1.7 percent. Other key data include durable goods Tuesday, and the employment cost index and personal income and spending Friday.