US Treasuries prices got mixed results Monday with the benchmark 10 year notes remained unchanged. Investors were cautious about the weak US manufacturing data for May as they wait for the jobs data to be released on Friday.
The US bond market was on the right track when the first trading day of June opened after getting its worst month in 2 and half years. The benchmark 10 year note yield reached a more than 13 month high in May after getting a 46 point increase. This has been its highest monthly gain since December 2010. The increase was attributed on the speculations that the Federal Reserve would soon pull back on its stimulus program worth $85 billion a month in asset purchases as the economy improves.
The US manufacturing data from the Institute for Supply Management led to speculations that another slowdown will happen in the spring that could keep the Fed purchasing Treasuries and mortgage-backed securities to bolster the economy.
According to the ISM, the US factory index dropped to 49.0 in May, which is the lowest reading since June 2009. A reading below 50 shows contraction.
The benchmark 10 year note remained unchanged Monday to yield 2.132 percent. The 30 year bond’s price increased 6/32 to yield 4.268 percent for the previous reading of 3.278 percent Friday. Economists are still determining if the move is a temporary one or a permanent one towards higher yields.
The US Labor Department is set to release its monthly payroll report on Friday. Economists surveyed by Reuters estimated that US employers added 170,000 jobs last month. This was slightly higher than the 165,000 increase in April. Fed policy makers have stated they want to see the jobless rate near 6.5 percent from the present rate of 7.5 percent. Analysts said that markets could move after the release of the jobs report.
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