Treasuries Close Notably Higher On Disappointing Manufacturing Data

(RTTNews) - Extending the upward trend seen over the past month, treasuries move sharply higher over the course of the trading day on Monday.

Bond prices spiked higher in morning trading and saw some further upside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 8.7 basis points to 2.581 percent.

With the steep drop on the day, the ten-year yield added to recent losses, ending the session at a three-month closing low.

The continued strength among treasuries came on the heels of the release of a report from the Institute for Supply Management showing a significant slowdown in the pace of growth in the manufacturing sector in the month of January.

The ISM said its purchasing managers index fell to 51.3 in January from a revised 56.5 in December. A reading above 50 indicates continued growth in the manufacturing sector, but economists had expected the index to show a much more modest decrease to a reading of 56.0.

With the much steeper than expected decrease, the purchasing managers index fell to its lowest level since hitting 50.0 in May of 2013.

Bradley Holcomb, chair of the ISM Manufacturing Business Survey Committee, said, "A number of comments from the panel cite adverse weather conditions as a factor negatively impacting their businesses in January."

Along with continued weakness in emerging market assets, the data increased the appeal of safe havens such as treasuries.

Meanwhile, traders largely shrugged off a separate report from the Commerce Department showing a modest increase in construction spending in the month of December.

Trading on Tuesday could be impacted by the release of a report on factory orders along with speeches by a pair of Federal Reserve officials.