NEW YORK: US Treasury yields rose to near two-week highs on Tuesday after data showed US manufacturing activity rebounded in February in a sign of economic resilience that weakened investor demand for safe-haven government debt.
Treasury prices fell, with the yield on benchmark 10-year notes and on the 30-year bond climbing to their highest levels in nearly two weeks after the Institute for Supply Management said its index of national factory activity rose to 49.5 in February from 48.2 in January, its strongest since September.
"This is a very encouraging report and it suggests that there are signs of stabilization in manufacturing and you're seeing higher yields, especially in the long end because of that," said Tom Simons, money market strategist at Jefferies & Co in New York.
Benchmark 10-year note and 30-year bond yields reached 13-day highs of 1.837 percent and 2.709 percent, respectively. The yield on the 2-year note rose to 0.849 percent, its highest in just over a month and the 5-year note yield climbed to 1.320 percent, its highest in just under a month.
Treasury prices were also weighed down by weak manufacturing data out of China and Europe, which restored risk sentiment and sent investors to stocks and oil on expectations that central banks would add stimulus. Oil prices rose on expectations of higher demand from China.
Easing of month-end demand as investors braced for several key events in coming weeks also put pressure on Treasuries, analysts said.
"We have a lot of big events coming up including Friday's employment report, the ECB meeting next week and FOMC next week," said Kim Rupert, managing director of global fixed income at Action Economics in San Francisco.
Adding further pressure to Treasuries were comments by New York Federal Reserve President William Dudley suggesting he sees downside risks to his US economic outlook, an assessment that could flag a longer than expected pause before the Fed's next interest-rate hike.
The benchmark 10-year note was last down 26/32 in price to yield 1.828 percent, up from 1.74 percent late on Monday.
The 30-year bond was last down 1-24/32 in price to yield 2.701 percent, up from 2.616 percent late on Monday.
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