NEW YORK: US Treasuries yields rose on Thursday after data showed new orders for US manufactured capital goods increased in July for the second straight month and as investors awaited a speech by Federal Reserve Chair Janet Yellen on Friday.
The Commerce Department said on Thursday that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 1.6 percent last month.
A 10.5 percent jump in demand for transportation equipment lifted overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, by 4.4 percent last month. That followed a downwardly revised 4.2 percent drop in June.
"We're trading a little heavy here after the data," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. "Durables rebounded after last month's very poor number."
Benchmark 10-year notes fell 4/32 in price to yield 1.57 percent, up from 1.56 percent late on Wednesday.
Improving economic data is raising investors' expectations that the Fed will raise interest rates again this year. Numerous regional Fed presidents in the past few weeks have painted a more upbeat picture of the economy.
New York Fed President William Dudley last week indicated that a rate hike could come as soon as the September meeting, although most analysts and investors view December as the most likely month this year.
Yellen's speech at a Fed conference in Jackson Hole, Wyoming, on Friday will be closely watched to see if she also adopts a more hawkish view of the economy.
Bonds also weakened before the United States is due to sell $28 billion in seven-year notes on Thursday, the final sale of $88 billion in coupon-bearing supply this week.
The Treasury Department sold $34 billion in five-year notes on Wednesday to strong demand.
The notes sold at a high yield of 1.125 percent, just below where it had traded before the auction. Indirect bidders, which include fund managers and other investors, bought 68.70 percent of the sale, the largest allocation since at least 2003.
A $26 billion auction of two-year notes on Tuesday also showed solid demand.
Other data on Thursday showed the number of Americans filing for unemployment benefits fell unexpectedly last wweek.
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