Treasury prices fell slightly Monday after strong new home sales numbers supported expectations. The price of the Treasury's 10-year note was down 1/32 point, or 31.25 cents per $1,000 in face value, around midday Monday, while its yield was unchanged from late Friday at 5.23 percent.

The 30-year bonds were down 5/32 point and yielded 5.27 percent, up from 5.26 percent late Friday, according to Moneyline Telerate. Prices and yields move in opposite directions. Two-year Treasury notes were unchanged and yielded 5.27 percent, unchanged from late Friday.

Yields on three-month Treasury bills rose to 4.99 percent as the discount rose 0.03 percentage point to 4.86 percent. Yields are the interest bonds pay by maturity, while the discount is the interest at which they are sold.

The Commerce Department reported that the sales of single-family homes increased 4.6 percent last month to seasonally adjusted annual rate of 1.234 million, the   Commerce Department. Year over year, new home sales were still down 5.9 percent from the pace in May 2005. In addition, April and March new home sales were revised upward.

Moreover, Wall Street had expected a drop in sales last month. The median estimate of 11 economists surveyed by Dow Jones Newswires and CNBC was for the May data to show a 4.0 percent decline from the previous month to a 1.150 million annual rate.

However, there has been some talk that the Fed could raise its target funds rate by half a percentage point, amid robust data and an uptick in inflation. Jason Evans, head of government trading at Deutsche Bank in New York, said the July fed funds futures contract is currently pricing in a 5 percent to 10 percent chance of a half-percentage point hike this week.

By M. Sese
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