Fall in foreign demand hurts bonds
Foreign purchases fall to lowest level since April; inflation talk also weighs.

NEW YORK (CNNMoney.com) -- Bonds fell Monday after a report showed foreign purchases of U.S. Treasurys at their lowest level since April.

The 10-year Treasury note fell 4/32, or $1.25 on a $1,000 note, to yield 4.81 percent, up from 4.80 late Friday.

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ECONOMY

The 30-year bond lost 8/32, or $2.50 on a $1,000 bond, to yield 4.93 percent, up from 4.92 in the previous session. Bond prices and yields move in opposite directions.

The five-year note fell 2/32 to yield 4.78 percent, while the two-year note slipped one tick, yielding 4.89 percent.

Net flows of capital into the United States fell to a much smaller-than-expected $32.9 billion in July, less than half of the nation's trade deficit in that month, the Treasury Department said Monday.

The report said net purchases of bonds dipped to $6.6 billion in the month, the lowest level of buying since April.

Treasurys had been under pressure earlier after bullish inflation remarks from European central bankers over the weekend and ahead of Tuesday's much anticipated housing report.

At a weekend G7 meeting in Singapore, Reuters reported European Central Bank Chief Economist Juergen Stark saying growth was very healthy and the job market was picking up, while ECB Governing Council member Mario Draghi said interest rates in the euro zone were still "extraordinarily low" and that spare capacity was running out.

Comments from members of the ECB hinting at future rate hikes could make the euro more attractive to investors.

In currency trading the dollar was mixed. The euro bought $1.2704, up from $1.2662 late Friday. The dollar bought ¥117.88, up from 117.55 in the previous session.

Traders are also waiting for a report on August housing starts, due Tuesday.

A cooling housing market over the last few months has helped ease some inflationary pressure, and investors will be looking to see if the cooling trend continues.

The National Association of Home Builders released a survey showing U.S. homebuilder sentiment dropped for the eighth consecutive month in September to the lowest level in 15 years, but the report had little impact on the bond market.

--Reuters contributed to this report

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.