BOND REPORT: Treasury Yields See Muted Action After Better-than-expected Manufacturing Data

A mass shooting late Sunday in Las Vegas has left at least 50 dead

U.S. Treasurys were little changed late-morning Monday, keeping yields in a narrow range, as investors grappled with a strong reading on U.S. manufacturing sentiment survey and geopolitical concerns, ranging from a Catalonian independence referendum and the deadliest shooting in modern U.S. history.

Though the action appeared muted, Treasury yields have beat a retreat from their intraday highs reached after a survey of Japanese businesses showed optimism among the nation's manufacturers was at a decade high, suggesting global growth continued to gain impetus from Japan. The country has historically struggled to cure deflation and revitalize its stagnant economy.

What are yields doing?

The 10-year benchmark Treasury yield was virtually unchanged at 2.330% on late Friday. The shorter 2-year note yield edged lower to 1.471%, from 1.479%, while the 30-year bond yield fell a basis point to 2.849%, versus 2.859%. Bond prices move in the opposite direction of yields.

What is moving markets?

A Las Vegas mass shooting (http://www.marketwatch.com/story/reports-of-dead-injured-after-mass-shooting-at-las-vegas-concert-2017-10-02)on Sunday left at least 50 people dead and more than 400 people injured in the deadliest attack in the U.S. since the attacks on New York and Washington, D.C. of Sept. 11, 2001. A gunman on the 32nd floor of a hotel had fired at a crowd at an open-air concert in the Mandalay Bay Casino.

And a province of Spain, Catalonia carried out a referendum on secession (http://www.marketwatch.com/story/eu-headed-for-new-crisis-analysts-fear-political-turmoil-after-violent-catalonia-vote-2017-10-02), with the majority of voters favoring independence. The vote erupted in violence as Madrid tried to stop the referendum from taking place.

But earlier in the day, Treasurys had initially traded higher after the Bank of Japan's survey of business conditions, or "tankan," showed the manufacturing index has risen to 22, a 10-year high, in the third quarter (http://www.marketwatch.com/story/japans-business-confidence-hits-10-year-high-2017-10-01). The jump may give central bankers the confidence to continue easing monetary policy after the BOJ's controversial asset-purchasing program drew criticism that it wouldn't help inflation reach the central bank's 2% annual target.

What data are in focus out?

What other assets moved?

The uncertainty after the Catalonian referendum weighed on demand for Spanish government paper, a so-called peripheral eurozone country. This widened the yield spread between it and those backed by healthier economies like Germany, reflecting investors were demanding more compensation, higher yields, for Spanish debt.

The German 10-year government bond yield fell more than a basis point to 0.453%, even as yield for an equivalent Spanish government bond jumped 10 basis points to 1.704%.

(END) Dow Jones Newswires

October 02, 2017 11:11 ET (15:11 GMT)