Treasuries Move Notably Lower After Upbeat Economic Data

(RTTNews) - Following the release of some upbeat U.S. economic data, treasuries moved notably lower over the course of the trading day on Tuesday.

Bond prices fell sharply in early trading and saw some further downside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 9.4 basis points to 1.834 percent.

With the sharp increase on the day, the ten-year yield ended the session at its highest closing level in almost a month.

The weakness among treasuries was partly due to the release of a report from the Institute for Supply Management showing a bigger than expected increase by its index of manufacturing activity in February.

The ISM said its purchasing managers index rose to 49.5 in February from 48.2 in January, although a reading below 50 continues to indicate a contraction in manufacturing activity. Economists had expected the index to inch up to 48.5.

Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee, said, "Comments from the panel indicate a more positive view of demand than in January, as 12 of our 18 industries report an increase in new orders."

A separate report from the Commerce Department showed a notable increase in construction spending in the month of January.

The report construction spending surged up by 1.5 percent to an annual rate of $1.141 trillion in January from the revised December estimate of $1.124 trillion. Spending had been expected to rise by 0.5 percent.

With the bigger than expected increase, the annual rate of construction spending reached its highest level since October of 2007.

A rally by stocks on Wall Street along with an increase by the price of crude oil also contributed to the weakness among treasuries.

Trading on Wednesday may be impacted by reaction to a report on private sector employment as well as the Federal Reserve's Beige Book.