Treasurys drop after strong manufacturing report

AP News
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Posted: Jan 03, 2012 4:27 PM
Treasurys drop after strong manufacturing report

Signs of economic strength pushed Treasury prices lower on the first trading day of the new year.

The Institute for Supply Management said Tuesday that manufacturing expanded in December at the fastest clip in six months. The ISM also reported that factories added more workers and received more new orders.

In a separate report, the government said construction spending rose 1.2 percent in November, more than double the rate economists had expected.

The pair of encouraging economic reports sent stock indexes up and lured traders out of the safety of U.S government bonds. The 10-year Treasury note slipped 65.6 cents Tuesday for every $100 invested. Its yield rose to 1.95 percent from 1.88 percent late Friday. U.S. bond trading was closed Monday for the New Year's holiday.

In other trading, the price of the 30-year bond fell $1.78 for every $100. Its yield rose to 2.97 percent from 2.89 percent. The yield on the two-year note edged up to 0.26 percent from 0.24 percent.

In the market for short-term Treasury bills, the 3-month T-bill paid a yield of 0.01 percent.