US Treasury yields held steady on Monday after rising slightly on New York manufacturing data in the morning, as market participants await a signal for monetary policy at the US Federal Reserve’s meeting next week.
Benchmark 10-year note yields dipped slightly on the day to 3.810 percent, from around 3.824 percent before the data. They are down from an eight-month high of 4.094 percent reached on July 7.
Interest rate sensitive two-year note yields held at 4.750 percent. They are down from 5.12 percent hit on July 6, their highest since June 2007.
The Empire State Manufacturing Survey’s general business conditions index, released on Monday morning, fell to 1.1 from 6.6 in June. It indicated that activity changed little in July at the same time as delivery times shortened and inventories declined steadily.
Just 29 percent of surveyed firms sounded off that conditions improved in July compared to June, while 27 percent said conditions had deteriorated.
At the same time, new orders edged higher while shipments increased and employment levels ticked up slightly from last month.
The survey results come as investors anticipate a small rate hike coming out of the US Federal Reserve’s next meeting on July 25-26.
“I think generally the Fed probably has one more hike to do in July,” said Tom di Galoma, managing director and co-head of global rates trading at BTIG in New York. “So I think that any time the market sees better-than-expected news, all of a sudden people start thinking about what the Fed’s going to do.”
What remains unclear is whether the Fed will hold rates steady after that or move forward with further hikes for the remainder of the year.
