Treasury yields jump on strong manufacturing data

Treasury yields rose for the first time in four sessions on Monday as stronger-than-expected manufacturing data boosted investor sentiment.


The yield on the benchmark 10-year Treasury note, which moves inversely to price, jumped 5 basis points to 1.554%, while the yield on the 30-year Treasury bond was also higher at around 2.041%. The 10-year yield has fallen about 30 basis points in the past two weeks.

Investors returned to the stock market after the S&P 500 suffered its biggest one-day drop since October on Friday. The benchmark is up more than 1% on Monday as investors reassessed the risk of the fast-spreading coronavirus. 

Data out Monday showed the U.S. manufacturing sector is in the midst of recovery, boosting investors' risk appetite. A final reading of manufacturing Purchasing Managers' Index (PMI) for January came in at 50.9, topping economists' estimate of 48.5. Any reading above 50 signals an expansion.

"Treasuries extended their selloff," Jon Hill, BMO's U.S. rates strategist, said in a note. "Any further bearish momentum will eventually come against an opening gap between 1.665% and 1.684% which hasn't yet been fully closed."

China's National Health Commission confirmed on Monday that there have been 17,205 confirmed cases of the coronavirus in the country, with 361 deaths. The number of deaths in mainland China as a result of the virus has now surpassed that of the SARS epidemic, which lasted from 2002 to 2003.

The World Health Organization (WHO) recognized the deadly pneumonia-like virus as a global health emergency last week, citing concern that the outbreak continues to spread to other countries with weaker health systems.

WHO's designation was issued in order to help the United Nations health agency mobilize financial and political support to contain the outbreak.

Atlanta Fed President Raphael Bostic will comment on the world's largest economy at an event in San Diego, California on Monday.

The U.S. Treasury is set to auction $45 billion in 13-week bills and $39 billion in 26-week bills.