Treasury yields dropped to start the week after economic data pointed to a slowdown in growth, while rising concerns about the delta coronavirus variant made investors flock to safe-haven bonds.
The yield on the benchmark 10-year Treasury note fell 8 basis points to 1.15%. The yield on the 30-year Treasury bond dipped 5 basis points to 1.836%. Yields move inversely to prices. One basis point equals 0.01%.
The U.S. manufacturing sector kept expanding in July, but at a slower pace than a month ago. The July Manufacturing PMI registered 59.5% a decrease of 1.1 percentage points from the June reading of 60.6 percent, according to the Institute for Supply Management.
The spread of the delta virus variant continued to unnerve investors. The U.S. is averaging more than 72,000 new Covid cases a day the last 7 days, according to the latest CDC data, levels not seen since February this year.
Meanwhile, Minneapolis Federal Reserve President Neel Kashkari told CBS’ “Face the Nation” on Sunday that the nervousness around the delta variant could slow the recovery of the U.S. labor market.
Concerns about inflation also plagued the market, however, a key inflation indicator showed lesser-than-feared price pressures on Friday. The core personal consumption expenditures price index rose 3.5% in June year over year. It marked a sharp acceleration in inflation, but came in slightly below a Dow Jones forecast of a 3.6% jump.
Both inflation and employment are economic indicators being watched by the Fed, as a signal to when it should start talking about tightening monetary policy.
Auctions are due to be held on Monday for $54 billion of 13-week bills and $51 billion of 26-week bills.
— CNBC’s Maggie Fitzgerald contributed to this market report.
