Treasuries Close Firmly In The Red On Upbeat Service Sector Data

(RTTNews) - With upbeat service sector data adding to recent concerns about the outlook for monetary policy, treasuries came under pressure during trading on Tuesday.

Bond prices moved notably lower in morning trading and remained firmly in the red throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 6 basis points to 2.662 percent.

The weakness among treasuries was partly due to the release of a report from the Institute for Supply Management showing that U.S. service sector activity expanded at a faster rate in October.

The ISM said its non-manufacturing index climbed to 55.4 in October from 54.4 in September, with a reading above 50 indicating growth in the service sector.

The modest increase came as a surprise to economists, who had been expecting the index to dip to a reading of 54.0.

The details of the report were more mixed than the headline index suggests, but the data still added to recent concerns that the Federal Reserve may begin scaling back its asset purchase program earlier than anticipated.

The renewed worries about the outlook for the stimulus program were stirred by last week's Fed statement, which was not as dovish as anticipated.

While the Conference Board is due to release its report on leading economic indicators in the month of September on Wednesday, the data is not likely to attract much attention.

Traders are likely to be looking ahead to the release of the third quarter GDP report on Thursday as well as the release of the October jobs report on Friday.