Yields rise on strong capital goods orders

• The Commerce Department said on Wednesday orders for non-defense capital goods excluding aircraft.
• The Treasury Department will sell $32 billion in seven-year notes on Wednesday.
• Benchmark 10-year note yields were last at 1.767pc, up from 1.740pc late Tuesday.

NEW YORK: US Treasury yields rose on Wednesday after data showed that new orders for key US-made capital goods increased by the most in nine months in October, boosting confidence that the US economy is solid.

The Commerce Department said on Wednesday orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, surged 1.2pc last month, the largest gain since January.

These so-called core capital goods orders were boosted by increased demand for machinery, computers and electronic products, and fabricated metals.

"The numbers certainly surprised to the upside ... there's been a lot of concern about weak investment," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.

However, "the problem is this is one of the most volatile data series we have in the main US data release calendar, so it is difficult to read into it," Goldberg said.

Risk appetite also improved after US President Trump said on Tuesday that the United States and China are close to agreement on the first phase of a trade deal, reducing demand for safe haven US government bonds.

Benchmark 10-year note yields were last at 1.767pc, up from 1.740pc late Tuesday.

The Treasury Department will sell $32 billion in seven-year notes on Wednesday, the final sale of $113 billion in coupon-bearing supply this week.

A $40 billion sale of two-year notes on Monday and a $41 billion sale of five-year notes on Tuesday were marked by solid demand.