NEW YORK: US Treasuries prices rose on Tuesday after new orders for US manufactured goods fell in January by the most in three years, suggesting the economy started the year on a weaker footing than thought.
Bonds had been steady before the report, supported by concerns over the impact of elevated oil prices on global demand. European sovereign debt spreads also widened, a supporting influence for safe-haven US Treasuries.
Benchmark 10-year notes rose 6/32, their yields easing to 1.91 percent from 1.93 percent before the report.
"Durable goods orders were significantly weaker than expected, which shot Treasury prices to the highs of the day," said John Canavan, market analyst at Stone & McCarthy Research Associates in Princeton, New Jersey.
Prices for US single-family homes fell in December, according to an S&P/Case-Shiller report, which also supported Treasuries prices.
Month-end demand also supported Treasuries prices, but with a caveat, Canavan said. Month-end demand would typically be a bigger factor in a month when the Treasury had sold long-term debt, as it did in February.
But with the Federal Reserve buying long-term debt as part of its "Operation Twist" effort to keep long-term interest rates low, there is less long-term debt outstanding than would have been the case.
That limits the extension of the Treasury indexes to which money managers benchmark their average portfolio durations so they need to buy less than usual to reach those benchmarks.
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