NEW YORK (MarketWatch) -- Treasurys rose Monday, with yields heading down for the first day in at least three, after a report showed manufacturing contracted more than expected in October.
Two-year note yields ) fell 10 basis points, or 0.10%, to 1.48%.
The Institute for Supply Management said its factory index fell to 38.9% from 43.5% in September.
Economists surveyed by MarketWatch predicted the index would decline to 41.5%. Any reading under 50% would indicate that more firms contracted last month than expanded.
The report will be added to anecdotes that things are bad and moods are sour, said strategists at RBS Greenwich Capital.
"Bad news is not new news -- simply ongoing," they wrote in an email.
Investors were also focused on recession fears after Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, said in a speech in Jerusalem that the government's response to the credit crisis "may have added volatility to financial-asset markets that were already roiled by an increasingly uncertain growth outlook."
Treasurys also may remain higher before monthly jobs report on Friday. Economists surveyed by MarketWatch expect the data to show the economy lost 200,000 jobs in October, the biggest drop since March 2003. See Economic Preview.
Treasurys erased October's gains at the end of the month, eventually losing 0.32% for the month, according to an index compiled by Merrill Lynch. Government debt has still returned 3.75% this year.
