Treasuries rise fourth day before manufacturing data, TIPS sale

Treasuries rose for a fourth day before a report that economists said will show manufacturing in the Philadelphia region shrank this month, underpinning demand for the safest assets.

Ten-year notes extended their run of gains to the longest in four weeks after purchasing managers indexes indicated both Chinese and euro-area manufacturing contracted in September. The benchmark yields climbed last week to the highest level since May after the Federal Reserve announced further stimulus. Ten-year Treasury Inflation Protected Securities rose even as the U.S. prepared to sell $13 billion of the securities.

“We’re talking about risk-off today with weaker China PMI numbers,” said Justin Lederer, an interest-rate strategist at Cantor Fitzgerald LP in New York, one of 21 primary dealers that are required to bid at Treasury debt auctions. “The market got overdone last week and needed a little time to reprice.”

The 10-year yield declined three basis points, or 0.03 percentage point, to 1.74 percent at 9:21 a.m. in New York, according to Bloomberg Bond Trader prices. It touched 1.89 percent on Sept. 14. The 1.625 percent security maturing in August 2022 gained 9/32, or $2.81 per $1,000 face amount, to 98 31/32. The four-day advance is the longest since the period ended Aug. 23.

Thirty-year bond yields fell four basis points to 2.92 percent and touched 2.90 percent.

Struggle Seen

U.S. government securities are rallying amid speculation the world’s biggest economy will struggle even as the Fed tackles the slowdown with a third round of bond purchases under quantitative easing and other actions.

The Fed Bank of Philadelphia’s general economic index will be negative 4.5 for September, according to a Bloomberg News survey. The Conference Board’s gauge of the outlook for the next three to six months fell 0.1 percent in August, after increasing 0.4 percent in July, a separate survey showed. The reports will be released at 10 a.m. New York time.

“Markets are not optimistic about today’s data, and so the Treasury market is supported,” said Ralf Umlauf, a research analyst at Landesbank Hessen-Thueringen in Frankfurt. “There’s a bit of snapback after the rise in yields we saw last week.”

Ten-year yields are likely to extend declines in the short- term before rising to 2.10 percent by year-end, Umlauf said.

The Labor Department reported that more Americans than forecast filed applications for unemployment benefits last week. Jobless claims decreased by 3,000 in the week ended Sept. 15 to 382,000, department figures showed today in Washington. The median forecast of 49 economists surveyed by Bloomberg projected 375,000.

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