By Laura Mandaro, MarketWatch SAN FRANCISCO (MarketWatch) — Treasurys tipped higher Monday, coming back from their worst day since March, as investors moved into assets perceived as safer on worries about China and after an index of New York-area manufacturing showed a deeper drop than forecast. Yields on the 10-year Treasury note 10_YEAR -1.06% , which move inversely to prices, were down 2 basis points at 1.85%. Prices had briefly rallied further after the New York Federal Reserve said its Empire State manufacturing index fell to negative 10.4 in September from negative 5.9 in August, far worse than expectations for an improvement to 0.0. Read more on Empire State. Treasurys had been higher before the data as stock futures slipped. “Risk assets appear to have paused for breath after a policy-fuelled two weeks,� wrote analysts at Barclays Capital. The Barclays analysts pointed to Asian markets, where concerns China would not provide more stimulus and growing anti-Japanese protests sent the Shanghai Composite down 2.1%. Read more on Asia Markets. Yields on the benchmark 10-year Treasury surged 15 basis points on Friday, and prices dove, after investors bid up stocks on relief that the Federal Reserve had opted for a large-scale bond purchase program to support the housing and job markets. Yields on the 2-year Treasury note 2_YEAR -1.55% were flat at 0.26%. Laura Mandaro is a MarketWatch editor, based in San Francisco.

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