Yields rise on US Treaury bonds

Yields were up Monday on US Treasury bonds, primarily on positive data on US manufacturing from the Institute for Supply Management.

The ISM’s index of manufacturing activity was up more than expected, while key categories of data such as employment and new orders were also strong.

The report’s conclusions led to speculation by analysts that interest rates in the US will probably go higher for longer than had previously been forecast.

Yields on 2-year Treasury bonds were up 7.9 basis points to 4.052 percent, while 10-year yields gained 5.8 basis points to 4.348 percent. The yield on the 10-year bonds was a three-month high, while 2-year yields hit their highest level in four years.

Bond yields in the eurozone were also up, primarily on manufacturing data that suggests that the economic outlook there might be improving. The 10-year Bund was yielding 3.3 percent, up 6 basis points, its highest level since July 22.

Yields are not expected to rise much further there, however, before Thursday’s meeting of the European Central Bank, when interest rtes are expected to be left at their present level.

The Bank of England also meets on Thursday, and speculation is high that it will lower UK interest rates. Yields on the 10-year gilt were up slightly on the day to 4.352 percent.

10-year yields have fallen 40 basis points since March in the UK, but Monday’s slight hike in yields may signal, analysts say, that their decline may have gone a bit too far.

Meanwhile in Japan, yields on the 10-year government bond were up 4 basis points to 1.345 percent in reaction to falling prices ion US Treasury bonds and to good news domestically relating to employment.

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