By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices mostly fell Tuesday,
sending yields higher, as the market begins to anticipate a spring
rebound in economic data, following an usually cold winter that
helped push benchmark government debt prices to their best quarter
since June 2012.
The 10-year note (10_YEAR) yield, which rises as prices fall,
was up 4 basis points on the day to 2.763%, according to Tradeweb.
The 30-year bond (30_YEAR) yield rose 4.5 basis points to 3.606%,
while the 5-year note (5_YEAR) yield rose a basis point to
1.743%.
In the quarter ended Monday, the benchmark 10-year yield fell
over 25 basis points, the biggest drop since the quarter ending in
June 2012, as the bond market defied expectations that yields would
rise in 2014, according to FactSet. The Barclays U.S. Aggregate
bond index, which measures the performance of a broad basket of
bonds, returned 1.8% last quarter, while the S&P 500 index
(SPX) only returned 1.3%.
Data on Tuesday provided a dose of optimism that economic
activity would rebound. The Institute for Supply Management said
Tuesday that manufacturing companies expanded slightly faster in
March, with its index rising to 53.7% from 53.2%. A reading over 50
indicates growth.
"This report offers an upbeat assessment on U.S. manufacturing
sector momentum in March, and more importantly with the key
forward-looking heading higher, it provides a constructive outlook
on the performance of this crucial sector going forward," said
Millan Mulraine, deputy head of U.S. research & strategy at TD
Securities, in a note.
The final U.S. Markit purchasing managers index came in at 55.5
in March, down from 57.1 in February. Construction spending in
February notched up 0.1%. Chrysler reported 13% sales growth in
March while Ford Motor Company (F) sold 3% more units.
The market is looking forward to a nonfarm payrolls report on
Friday. Economists expect 200,000 jobs have been added in March, up
from 175,000 in February.
Strategists at Credit Suisse wrote in a Tuesday report: "The
market will focus on employment-related data this week, with the
consensus converging on a continued rebound from the early year
weakness. A strong print on Friday could be the first step towards
improving spring data leading to a more sustained sell-off."
Treasury prices began falling Tuesday after slightly optimistic
data on Chinese and euro-zone manufacturing. China's official
manufacturing gauge rose to 50.3 in March from 50.2 in February.
Euro-zone's March PMI hit 53.0 in March. While that number is down
from 53.2 in February, a reading above 50 indicates month-to-month
growth.
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