NEW YORK / LONDON (IT BOLTWISE) – US Treasury bond prices suffered slight losses on Monday following the release of weak economic data. The ISM Purchasing Managers’ Index fell unexpectedly, affecting expectations of interest rate cuts. Analysts see the sector’s prospects as still clouded.
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US Treasury bonds were under pressure on Monday as prices fell slightly. The 10-year futures contract, known as the T-note future, fell 0.04 percent to 112.62 points. The yield on these bonds was 4.114 percent. This development was significantly influenced by weak economic data from the USA, which was published in the afternoon.
In particular, the Purchasing Managers’ Index ISM, an important indicator of the mood in industry, unexpectedly fell by 0.4 points to 48.7 points in October. This value is below the growth threshold of 50 points and therefore signals a decline in economic activity. Economists had previously expected an increase to 49.5 points, which increased disappointment with the actual figures.
Analyst Tobias Basse from Nord/LB commented that the ISM index cannot provide a positive signal for the US economy, which is already suffering from data poverty. The publication of these figures was particularly eagerly awaited as little economic data was available due to the partial closure of federal authorities. At least the ‘Orders’ component is approaching the 50 point mark, which could be seen as a small glimmer of hope.
Ralf Runde, analyst at Helaba, sees the sector’s prospects as still clouded. He points out that interest rate cut expectations, which had weakened significantly after the Federal Reserve’s last decision, could now be strengthened somewhat again. This could further influence bond markets in the coming weeks as investors await new signals from the central bank.
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