Treasuries exhibited a significant upward movement on Tuesday, making a recovery after experiencing a downward trend in the past several sessions.
Early in the session, bond prices surged and maintained a strong positive stance throughout the day. Consequently, the yield on the benchmark ten-year note, which inversely correlates with its price, decreased by 6.7 basis points to 3.844 percent.
The ten-year yield had previously risen for five consecutive sessions, reaching its highest closing level in two weeks by last Friday.
The recovery in treasuries was spurred by renewed economic concerns following the release of a report by the Institute for Supply Management (ISM), indicating a continued contraction in U.S. manufacturing activity in August.
The ISM reported that its manufacturing PMI slightly increased to 47.2 in August from 46.8 in July; however, a reading below 50 still signifies contraction. Economists had anticipated the index would rise to 47.5.
"Manufacturing employment contracted for the third consecutive month as manufacturing activity has decelerated recently," stated Jeffrey Roach, Chief Economist at LPL Financial.
He further commented, "Although the manufacturing sector now constitutes a smaller portion of the macro economy compared to previous cycles, investors should still brace for a broader slowdown throughout the remainder of this year."
An additional report by the Commerce Department unexpectedly revealed a slight decline in U.S. construction spending in July.
Attention will turn to the release of monthly job data later this week, with economists forecasting an increase of 165,000 jobs in August, following a rise of 114,000 jobs in July.
The unemployment rate is predicted to decrease slightly to 4.2 percent in August, after climbing to 4.3 percent in July, marking its highest level since October 2021.
Other reports on the U.S. trade deficit, factory orders, and job openings, as well as the Federal Reserve’s Beige Book, are expected to attract interest on Wednesday.
