NEW YORK (MarketWatch) — U.S. Treasury prices rose on Monday after a round of economic data as investors prepared for a Federal Reserve meeting this week.
The 10-year Treasury note 10_YEAR, -1.03% yield, which falls as prices rise, was down 2.5 basis points on the day at 2.591%. The yield, a benchmark for borrowing costs across the world, is on track to drop for its first session in eight.
While investors largely expect the central bank to hold tight to its near-zero interest rates until mid-2015, any change in tone toward a more hawkish stance on rate hikes could send yields higher. Yields have been rising as investors prepare for the meeting, which is followed by a statement and press conference on Wednesday.
“The Fed is likely to alter its language to reflect the passage of time and steady improvements in the labor market, more than a radical change in the macro outlook,” said Deutsche Bank strategists, led by Francis Yared, in a note.
The 30-year bond 30_YEAR, -0.81% yield fell 2.5 basis points to 3.324% and the 5-year note 5_YEAR, -1.04% yield dropped 2 basis points to 1.800%.
Treasurys held gains after an index of manufacturing activity in the New York region jumped to its highest level since December 2009. The Empire State manufacturing gauge rose to 27.5, above the 16.0 expected by economists.
Investors had a muted reaction to data showing industrial production dropped 0.1% in August, its first fall in seven months.
Elsewhere, China’s industrial growth slowed to a six-year low in August.
The eurozone trade surplus widened, but exports nonetheless fell on a seasonally adjusted basis.
