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U.S. Treasury yields rose on early Monday’s trade as strong data from China’s manufacturing sector offered a rare positive on the global economy’s health as it looks to recover from the COVID-19 pandemic.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.562% was up 1.3 basis points to 0.549%, while the 2-year note rate TMUBMUSD02Y, 0.113% held steady at 0.109%. The 30-year bond yield TMUBMUSD30Y, 1.247% climbed 3.3 basis points to 1.231%.
What’s driving Treasurys?
Investors will handle key economic data on the U.S. manufacturing sector. The Institute for Supply Management’s factory index for July is due at 10 a.m. ET, after having come in at a reading of 52.6% in June. Any number above 50 represents an expansion in economic activity.
A pickup in Chinese factory activity showed the recovery in the world’s second-largest economy remained on track. China’s July Caixin Manufacturing PMI bouncing to 52.8, the highest since Jan. 2011.
Global equity markets climbed on the positive economic sentiment. The Stoxx Europe 600 SXXP, +1.63% traded up 1.6%, while China’s CSI 300 index 000300, +1.62% also gained 1.6%. Futures for the S&P 500 SPX, +0.76% and the Dow Jones Industrial Average DJIA, +0.43% pointed to a higher open for Wall Street on Monday.
See: Why August in a pandemic is a time for vigilance for stock market investors
Lawmakers in Congress continued to butt heads over an additional coronavirus relief package. Discussions have revolved around the generosity of unemployment benefits, with Democrats looking to preserve the original $600 a week amount while Republicans have looked to trim that number.
Meanwhile, reports indicate that the Federal Reserve was on course to break away from its previous monetary-policy approach of raising rates as soon as inflation reached the central bank’s 2% target, according to The Wall Street Journal. Instead, the Fed would allow inflation to run above 2% for some time to make up for periods when prices undershot the target.
What did market participants’ say?
“Equities ran hard overnight in response to better purchasing surveys in China and Europe. ISM manufacturing in the US this morning is expected to be even better,” said Jim Vogel, an interest-rate strategist at FHN Financial.
