CORRECTED-TREASURIES-Yields move higher after U.S. manufacturing data

Market trading boards are seen at the Australian Securities Exchange in Sydney, Friday, February 9, 2018. ( AAP Image/Ben Rushton) NO ARCHIVING
 (Corrects paragraphs one and three to show U.S. factory
activity hit a nearly two-year high, not more than 1-1/2 year
high)
    By Karen Pierog
    CHICAGO, Sept 1 (Reuters) - U.S. Treasury yields ticked
higher on Tuesday after data showed the country's manufacturing
activity accelerated to a nearly two-year high in August. 
    The benchmark 10-year yield was last up 2.3
basis points at 0.7163%.
    The Institute for Supply Management (ISM) said on Tuesday
its index of national factory activity increased to a reading of
56.0 last month from 54.2 in July. That was the highest level
since November 2018 and marked three straight months of growth.
A reading above 50 indicates an expansion in
manufacturing.
    It followed data out of China and Europe that showed an
uptick in manufacturing last month.            
    Andrew Richman, senior fixed income strategist at Sterling
Capital Management, said the data helped boost yields, which
jumped last week after the U.S. Federal Reserve's announcement
of a new policy framework involving higher inflation.

    "It's all about inflation expectations, which have risen a
little bit here from where they were," he said. 
    Kim Rupert, senior economist at Action Economics in San
Francisco, said that the Treasury market was consolidative after
yields fell on Monday largely due to a big month-end duration
index extension.
    "There's still an underlying bid in the market because the
Fed is going to maintain its zero-rate posture," Rupert said. 
    Looming large this week is Friday's release of August
employment data, which could shed light on the pace of the
economic recovery.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last up less
than a basis point at 0.1368%.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, which is viewed as an indicator of
economic expectations, was last at 57.60 basis points, less than
a basis point higher than at Monday's close.
September 1 Tuesday 10:47 AM New York / 1447 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.105        0.1068    -0.005
 Six-month bills               0.115        0.1167    -0.002
 Two-year note                 99-250/256   0.1368    0.006
 Three-year note               99-234/256   0.1542    0.008
 Five-year note                99-226/256   0.2736    0.011
 Seven-year note               100-8/256    0.4954    0.013
 10-year note                  99-32/256    0.7163    0.023
 20-year bond                  97-152/256   1.2618    0.034
 30-year bond                  97-48/256    1.4918    0.040
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         8.50         0.00    
 spread                                               
 U.S. 3-year dollar swap         8.00        -0.50    
 spread                                               
 U.S. 5-year dollar swap         6.25        -0.25    
 spread                                               
 U.S. 10-year dollar swap        0.25         0.00    
 spread                                               
 U.S. 30-year dollar swap      -38.00         0.25    
 spread                                               
                                                      
 







 (Reporting by Karen Pierog
Editing by Chizu Nomiyama)
  

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