Treasuries Close Slightly Higher After Seeing Initial Weakness

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After initially moving to the downside, treasuries turned modestly higher over the course of the trading session on Monday.

Bond prices gave back some ground going into the close but still ended the day in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by nearly a basis point to 2.732 percent.

With the slightly lower close on the day, the ten-year yield ended the session at its lowest closing level in two months.

The turnaround by treasuries came amid a sell-off on Wall Street after China announced it is imposing tariffs on 128 imported goods originating in the U.S.

The move by China comes in response to President Donald Trump's decision to impose tariffs on steel and aluminum imports.

China revealed it is imposing a 15 percent tariff on 120 American products such as fruits, nuts, wine and steel pipes and a 25 percent tariff on eight other products, including pork and scrap aluminum.

The decision by China has added to recent concerns about a potential trade war after Trump also announced plans to impose about $50 billion of tariffs on Chinese goods over intellectual-property violations.

In U.S. economic news, the Institute for Supply Management released a report showing activity in the manufacturing sector grew at a slower than expected rate in the month of March.

The ISM said its purchasing managers index fell to 59.3 in March from 60.8 in February, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to edge down to 60.0.

A separate report from the Commerce Department showed construction spending rose by much less than expected in February.

Amid a quiet day on the U.S. economic front, trading on Tuesday may be impacted by any further developments regarding a potential trade war.