US Bond Yields Continue to Rise After Manufacturing Data

U.S. bond yields continued their ascent on Thursday, bolstered by recent statements from Federal Reserve officials and a series of unexpectedly positive economic reports. The yield on the benchmark 10-year Treasury note climbed to 4.330% from its previous close of 4.299%.

This increase was fueled by comments from Beth Hammack, a member of the Federal Open Market Committee, who stated she would not support quantitative easing if policymakers were forced to decide on it “tomorrow.” Her remarks signaled a potential lean toward tighter monetary policy, which tends to increase bond yields as investors anticipate higher returns.

The economic data released on the same day also played a significant role. The S&P Global’s industrial purchasing managers’ index (PMI) for August saw an unexpected jump of 4.5 points, reaching 53.3 and surpassing forecasts that had predicted a decline to 49.7. This marked the fastest pace of industrial expansion in three years. Additionally, U.S. home sales in July rose by 2.0% month-over-month to 4.01 million units, beating expectations of a 0.3% decrease.

Combined, these developments suggest that the U.S. economy may be stronger than previously thought. This could reduce the likelihood of the Federal Reserve adopting a more accommodative monetary policy in the near term, which in turn drives up bond yields.