U.S. Treasurys yields rose on Tuesday after traders reconsidered recent bullish bets on U.S. bonds on nervousness ahead of Thursday's closely watched U.S. jobs report.
The yield on 30-year Treasury bonds hit a near one-week high of 3.40 percent on fears bullish positions could lead to losses if the U.S. government reports stronger-than-expected non-farm payrolls later this week.
"You certainly want to protect your profits going into the big number, especially if you had the winner for the year,'' said Ellis Phifer, market strategist at Raymond James in Memphis, Tennessee, in reference to traders taking profits on 30-year Treasury bonds.
Long-dated Treasurys have notched the biggest gains this year, with the Barclays U.S. Treasury: 25 plus-year index rising 13.4 percent in the first half.
Economists expect Thursday's jobs report to show U.S. employers added 212,000 jobs in June, down from 217,000 in May, according to a Reuters poll.
While the initial reaction was muted, analysts said some strong U.S. and Chinese manufacturing data also dampened demand for safe-haven bonds as the day proceeded.
Financial data firm Markit said its final U.S. Manufacturing Purchasing Managers Index rose to 57.3 in June, the highest reading since May 2010. The preliminary read for the index was 57.5.
The Institute for Supply Management, meanwhile, said its index of national factory activity was 55.3 in June, almost unchanged from May's 55.4 reading. The figure was just under the 55.8 reading expected by a Reuters poll of economists.
"It appears that the first quarter was an aberration and that growth is getting back on track here,'' said Brian Rehling, chief fixed-income strategist at Wells Fargo Advisors in St. Louis.
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China's final HSBC/Markit Purchasing Managers' Index (PMI) rose to 50.7, above the 50 mark that separates growth from contraction for the first time in six months. The official China PMI, geared more towards bigger state-owned firms, hit a six-month high of 51.0.
Benchmark 10-year Treasury notes last traded 10/32 lower in price to yield 2.57 percent, from a yield of 2.52 percent late Monday. U.S. 30-year Treasury bonds last traded 22/32 lower in price for a yield of 3.40 percent, versus 3.34 percent late Monday.
The Federal Reserve on Tuesday bought $2.945 billion of Treasurys maturing August 2020-June 2021 as part of its economic stimulus program, which had little impact on Treasurys prices.
Gains in stocks also weighed on safe-haven bonds. On Wall Street, the benchmark S&P 500 stock index hit an intraday record high and was last up 0.77 percent.