Yields climb as manufacturing data, FOMC minutes loom

CHICAGO: US Treasury yields were higher on Wednesday as investors looked ahead to manufacturing data and clues from the Federal Reserve on the potential for yield curve control.

The benchmark 10-year yield, which rose slightly after the release of ADP jobs data, was last up 3.1 basis points at 0.684%.

Jim Vogel, an interest rate strategist at FHN Financial in Memphis, Tennessee, said the market's focus will be on the Institute for Supply Management (ISM) manufacturing index for June, particularly after data showed China's factory activity grew at its fastest clip since December.

"Anything well over 50 is going to put further pressure on bond prices," he said.

The Fed, meanwhile, will release minutes from its June meeting where the topic of yield curve control, a strategy that involves targeting interest rates for certain maturities, was discussed. On Tuesday, New York Federal Reserve Bank President John Williams said the potential costs and benefits of the move were still being analyzed.

"I think there's the idea that yield curve control and just sort of other new policies from the Fed are viable but not necessarily entering general circulation anytime soon," Vogel said.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was unchanged at 0.1544%.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was at 53 basis points, 2.6 basis points higher than at Tuesday's close.