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US Treasury yields flat amid data

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Scott Olson | Getty Images

U.S. sovereign bonds were flat on Monday, ahead of what is likely to be a crucial week for central banks, as the European Central Bank meets Thursday and closely watched U.S. jobs data is out on Friday.

The European Central Bank is expected to expand its bond-buying program and cut its already negative deposit rate on Thursday. That coincides with a week that could bring the most important U.S. jobs report and other data the Fed will consider when it meets Dec. 15 and 16.

Symbol
Yield
 
Change
%Change
US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
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US 10-YR
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US 30-YR
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On Monday, the Chicago purchasing managers' index for November came in at 48.7, below the October reading of 56.2.

Pending home sales rose 0.2 percent in October, the National Association of Realtors said.

Yields on 10-year Treasurys traded around 2.212 percent on Monday, after closing at 2.22 percent on Friday in a shortened trading session, after markets closed early.

Meanwhile, 30-year bond yields briefly climbed back over the 3 percent handle, before trading at 2.979 percent. For November, the U.S. 2-year note yield posted its biggest monthly rise in more than five years, according to The Wall Street Journal.

In the coming week, there are also several important Fed appearances, including two by Chair Janet Yellen. She speaks to the Economic Club of Washington on Wednesday and testifies before the congressional Joint Economic Committee on Thursday, giving her opportunities to reinforce the Fed's message on the potential for a December rate increase.

The dollar, currently trading around $1.057 against the euro, spiked to its highest level in over eight months against a basket of currencies. It will be closely watched this year as the diverging paths of the Federal Reserve and ECB come into focus.

"A stronger U.S. dollar helps achieve the tightening effect of rising interest rates, effectively doing the Fed's work for it. We don't think that changes the timeframe for a U.S. interest rate hike, but it does weigh on both the pace of increases and the terminal rate that the U.S. Fed reaches in their cycle. It's another reason why we expect to see quite a shallow rate cycle," said international chief investment officer for fixed income at JPMorgan Asset Management, Nick Gartside.

On the supply side, the Treasury will auction $54 billion in 13 and 26-week bills on Monday.

As for the oil market, the Organization of the Petroleum Exporting Countries is not expected to change its stance on letting the market set prices when it meets Friday. A year ago, OPEC said it would not cut back on output unless other higher-cost producers did the same and instead, it would let the market set the price. The market did drive the price, and oil is now trading in the low $40s a barrel.

Benchmark Brent for January fell 34 cents, or 0.8 percent, to $44.52 a barrel, while U.S. crude settled down 0.1 percent at $41.65 a barrel.

In Paris, global leaders including U.S. President Barack Obama arrived for the kick-off of key climate talks as part of the United Nations' COP21 summit.