US Treasury yields continue their recovery following the announcement of a bond buyback by the US Department of the Treasury, while data reveal that business activity remains solid despite a slowdown in manufacturing.

Yields rise as strong services activity offsets Treasury buyback support

US Treasury yields across the whole curve rose, with the 2-year Treasury yield – the most sensitive to changes to the Fed funds rate – rising five basis points (bps) to 4.24%, while the 10-year benchmark note, rose almos three bps to 4.474%.

The US 30-year bond yield continued to grab headlines on major financial news websites, ending the week at 5.276%, up 2.5 bps, despite the US Treasury announcing it would increase purchases at the long end of the curve from $2 to $4 billion.

Data-wise, the US S&P Global Services PMI improved in August, beating estimates, while the manufacturing index slowed despite moderate growth. Factory prices are affected by disruptions from the US-Iran war, raising energy costs.

In the US, the focus shifts to Treasury Secretary Bessent announcing Iranian sanctions on Monday, the US PCE report, BLS prelim benchmark revisions, and Fed Chair Warsh at Jackson Hole.

The US Dollar Index (DXY), which tracks the performance of the buck’s value against six currencies, is unchanged, down 0.02% at 98.84.

US 10-year Treasury yield chart