Treasuries fell, with 10-year note yields rising for the first time in seven days, after a gauge of manufacturing was stronger than forecast and as a Federal Reserve official said the drop in oil prices will boost the economy.
The benchmark yields increased from an almost a six-week low after the Institute for Supply Management’s factory index was little changed at 58.7 last month, the second-strongest level since April 2011 and compared with the median forecast in a Bloomberg News survey of 58. Fed Bank of New York President William C. Dudley said that drop in oil prices to a five-year low will stimulate consumer spending. Corporate bond sales also diverted demand from government securities.
“The market seemed to turn on a dime with the ISM report,” said Michael Pond, head of global inflation-linked research at Barclays Plc, one of 22 primary dealers that trade with the Fed. “Dudley emphasized today that the drop in oil is likely good for consumer spending.”