MW: Treasurys hold losses after manufacturing data
By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) — Treasurys held losses Monday despite a soft reading of the Markit U.S. manufacturing purchasing managers’ index.
The index fell to 51.9 in June from 52.2 in the flash reading and a 52.3 reading in May, recording the slowest pace of growth since last October.
Another manufacturing indicator, the ISM manufacturing index, comes out at 10 a.m. Eastern time.
The 10-year Treasury note 10_YEAR +1.08% yield, which moves inversely to price, was up 3.5 basis points on the day at 2.526%.
The 30-year bond 30_YEAR +0.51% yield was up 2.5 basis points at 3.526%, and the 5-year note 5_YEAR +1.94% yield was up 3 basis points at 1.429%.
The rise in yields begins “what will almost certainly be a slow week for the domestic markets,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott, in a note.
Stock futures pointed higher.
Monday’s lower Treasury prices come after nearly two months of rising yields in the government debt market, which brought yields in other sectors of the bond market higher along with it.
The 10-year Treasury yield rose by 64 basis points in the last quarter. Bond mutual funds and exchange-traded funds saw a spike in outflows as nervous investors pulled their money out of fixed income.
Read: What you need to know before dumping your bond funds.
Indications that the Federal Reserve will act to wind down its bond-purchase program this fall have challenged markets to price in potential changes in monetary policy. Fed Chairman Ben Bernanke has emphasized the central bank’s dependence on the pace of workforce gains as a key indicator for whether the Fed will scale back its program.
That will focus market attention on the Labor Department’s nonfarm payrolls and ADP employment reports, which all come out this week.
“The ADP and jobs report should allow the market to test the recent high yields even though I do believe the data ultimately this week should not be all that supportive to a higher-yield environment,” said Thomas di Galoma, senior vice president of fixed-income-rates trading at ED&F Man Capital Markets, in a note.
Read: Why volatility may be higher for the jobs report figures.
Ben Eisen is a MarketWatch reporter based in New York.
