US Treasury yields fall as weak manufacturing data persists
ISM manufacturing PMI rose to 47.2 in Aug, still indicating contraction
Fed expected to cut rates by at least 25 bps at September meeting
Two-year Treasury yield fell 6.2 bps, biggest drop since August 23
Updated at 2:33 p.m. ET/1833 GMT
By Chuck Mikolajczak
NEW YORK, Sept 3 (Reuters) -U.S. Treasury yields fell on Tuesday, with the benchmark 10-year note set to break a five-session streak of gains, after data signaled activity in the manufacturing sector remains soft.
The Institute for Supply Management (ISM) said its manufacturing PMI rose to 47.2 in August from an eight-month low of 46.8 in July, and remained below the 50 reading to indicate contraction for the fifth straight month.
"The bounce in manufacturing from July’s abysmal reading wasn’t all that great. New orders dropped, which doesn’t augur well for a future rebound in activity," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.
"The Fed cares about the labor market, not the manufacturing sector. It will take service sector weakness to scare the Fed into doing more than a 25 basis point cut and that just doesn’t seem to be in the cards for now."
Investors will get a host of data on the labor market this week, culminating in Friday's key government payrolls report.
The yield on the benchmark U.S. 10-year Treasury note US10YT=RR fell 5.7 basis points (bps) to 3.854%. The yield snapped a two-week streak of declines last week as economic data boosted expectations the Fed was more likely to opt for a smaller cut of 25 basis points at its Sept. 18 policy announcement.
Markets have fully priced in a rate cut of at least 25 bps at the upcoming meeting, with expectations for a cut of 50 bps climbing to 37% after the data, up from 30% in the prior session, according to CME's FedWatch Tool.
The yield on the 30-year bond US30YT=RR fell 5.3 basis points to 4.143%.
Recent comments from Fed policymakers signal the majority are ready to support a rate cut by the central bank at its September meeting.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=RR, seen as an indicator of economic expectations, was at a negative 3.8 basis points.
The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations, fell 3.7 basis points to 3.865%, on track for its biggest daily drop since Aug. 23.
The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) US5YTIP=RR was last at 1.984% after closing at 2.034% on August 30.
The 10-year TIPS breakeven rate US10YTIP=RR was last at 2.112%, indicating the market sees inflation averaging about 2.1% a year for the next decade.
ISM manufacturing PMI https://reut.rs/3APIyJF
Reporting by Chuck Mikolajczak; Editing by Alexander Smith and Jonathan Oatis
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
