Treasurys fall on strong manufacturing report

AP News
Posted: Jul 01, 2011 5:28 PM
Treasurys fall on strong manufacturing report

Treasury prices are ending the week lower after a surprisingly strong manufacturing report on Friday eased concerns that the economy is slowing. That decreased demand for less risky investments like government bonds.

Treasurys fell each day this week, pushing the yield on the 10-year note up 0.38 percentage point since last Friday. That's because the week was marked by fading worries over turmoil in Europe after Greece managed to pass bills that would give it access to emergency funds needed to avoid a default.

There was also weak demand for the three auctions of new Treasury debt during the week. Investors were worried about who would make up for the loss of the Federal Reserve as a buyer. The U.S. central bank officially ended its bond-buying plan on Thursday, after buying $600 billion in U.S. bonds over the past eight months to keep interest rates low and support the economy.

On Friday, the price of the benchmark 10-year Treasury note fell 18.7 cents for every $100 invested. Its yield rose to 3.19 percent from 3.17 percent late Thursday. Bond yields rise when their prices fall.

The Institute for Supply Management, a trade group of purchasing executives, on Friday said U.S. manufacturing picked up in June after a slump in May. It was the latest sign that the economy could be strengthening after a spring slump.

In other trading, the price on the 30-year Treasury bond was down 21.8 cents, sending its yield up to 4.39 percent from 4.37 percent late Thursday.

The yield on the three-month T-bill was unchanged at 0.01 percent. Its discount was 0.02 percent.