2021.08.0219:15:00UTC+00Treasuries Move Notably Higher Following Disappointing Manufacturing Data

Treasuries moved notably higher during trading on Monday, extending the upward move seen over the course of the previous session.

Bond prices pullback off their best levels in afternoon trading but remained firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 6.5 basis points to 1.174 percent.

The ten-year yield climbed off its intraday low of 1.151 percent but still ended the session at its lowest closing level in almost six months.

The strength among treasuries came as traders looked to the relatively safe haven of bonds following the release of a report from the Institute for Supply Management showing an unexpected slowdown in the pace of growth in U.S. manufacturing activity in the month of July.

The ISM said its manufacturing PMI dipped to 59.5 in July from 60.6 in June. While a reading above 50 still indicates growth in the manufacturing sector, economists had expected the index to inch up to 60.9.

With the unexpected decrease, the manufacturing PMI pulled back further off the 37-year high of 64.7 reached in March and fell to its lowest level since hitting 58.7 in January.

Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted panelists reported that their companies and suppliers continue to struggle to meet increasing demand levels.

"As we enter the third quarter, all segments of the manufacturing economy are impacted by near record-long raw-material lead times, continued shortages of critical basic materials, rising commodities prices and difficulties in transporting products." Fiore said.

He added, "Worker absenteeism, short-term shutdowns due to parts shortages and difficulties in filling open positions continue to be issues limiting manufacturing-growth potential."

A separate report from the Commerce Department showed construction spending crept up by less than expected in the month of June.

Later this week, trading may be impacted by reaction to the Labor Department's closely watched report on the employment situation in the month of July.

Economists currently expect employment to spike by about 900,000 jobs in July after surging by 850,000 jobs in June. The unemployment rate is expected to dip to 5.7 percent from 5.9 percent.