Treasuries Pull Back Sharply Following Economic Data

(RTTNews) - After trending higher over the past few sessions, treasuries showed a notable move back to the downside during trading on Monday.

Bond prices moved steadily lower throughout much of the session before ending the day firmly in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 9.7 basis points to 2.192 percent.

With the increase on the day, the ten-year yield climbed off the one-month closing low set in the previous session.

The pullback by treasuries came following the release of a slew of U.S. economic data, including a report from the Institute for Supply Management showing that its index of manufacturing activity rose by more than expected in May.

The ISM said its purchasing managers index climbed to 52.8 in May from 51.5 in April, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to inch up to 51.8.

Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee, said, "Comments from the panel carry a positive tone in terms of an improving economy, increasing demand, and improving flow of goods through the West Coast ports."

"Also noted; however, are continuing concerns over the price of the US dollar and challenges affecting markets related to oil and gas industries," he added.

A Commerce Department report released this morning also showed a slightly bigger than expected increase in personal income in April, although the report also showed that personal spending was unexpectedly flat.

The report said personal income rose by 0.4 percent in April after coming in unchanged in March. Economists had expected income to climb by 0.3 percent.

Meanwhile, the Commerce Department said personal spending came in unchanged in April following an upwardly revised 0.5 percent increase in March. Spending had been expected to edge up by 0.2 percent.

A separate Commerce Department report showed that construction spending jumped more than expected in April to reach a six-year high.

While a report on factory orders may attract some attention on Tuesday, traders may be reluctant to make significant moves ahead of the release of more closely watched reports in the coming days.