By Joseph Adinolfi, MarketWatch

Yields finish Monday's session lower

The 10-year Treasurys finished August flat as investors dumped bonds in the final hours of Monday's trading session on renewed expectations that Federal Reserve policy makers might raise interest rates at their next meeting.

The yield on the benchmark 10-year note finished the month 0.3 basis point lower at 2.213%. Meanwhile, the yield on the two-year note rose 6.3 basis points to finish August at 0.739% -- its largest one-month yield gain since February.

Comments by Federal Reserve policy makers made during last week's annual summit in Jackson Hole, Wyo. hinted at a readiness to begin raising interest rates this year.

Federal Reserve Vice Chairman Stanley Fischer, who spoke at the summit on Saturday, said he was confident inflation would soon rise toward the Fed's 2% target as the economy adjusts to a stronger dollar and lower commodity prices. However, he didn't say anything definitive about the likelihood of an increase at the Fed's September meeting.

"Even if it's not September, it certainly seems like the Fed wants to move this year," said Larry Milstein, managing director of government and agency trading at R.W. Pressprich & Co.

Analysts were looking ahead to Friday's nonfarm payrolls report for August--the last major piece of economic data expected before the next meeting of the Federal Reserve's rate-setting committee, which begins on Sept. 16.

Read: Fed watching China closely, Fischer says (http://www.marketwatch.com/story/fed-watching-china-closely-fischer-says-2015-08-29)

Read: Treasury yields see largest one-week rise since June (http://www.marketwatch.com/story/treasury-yields-fall-after-a-weak-reading-on-us-inflation-2015-08-28)

The Treasury market saw some unusually volatile moves for August, a month which usually features relatively calm trading. Yields recorded their largest (http://www.marketwatch.com/story/treasury-yields-fall-after-a-weak-reading-on-us-inflation-2015-08-28) one-week rise since June last week.

Demand for longer-dated bonds has been particularly intense during the final trading session of August, but markets overcame a wave of early buying to finish Monday's session lower, said Ian Lyngen, senior rates strategist at CRT Capital Group LLC.

Lyngen said in a note to clients that volatility in Monday's session was about a third of last week's levels.

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(END) Dow Jones Newswires

August 31, 2015 17:31 ET (21:31 GMT)