Treasury Prices Surge on Weak Manufacturing Data; Lowest Growth Reading In Nearly Five Years Sends Investors to Safety
Treasurys prices gained significant ground on a much weaker-than- expected report on the health of the U.S. manufacturing sector, which has given fresh urgency to talk of a recession.</br></br>The Institute of Supply Management's December manufacturing index showed the sector contracted after 10 consecutive months of expansion. The index fell to 47.7 last month from 50.8 in November, marking the weakest reading in nearly five years. A number above 50 indicates growth.</br></br>"It was a terrible number," said Mary Ann Hurley, vice president of fixed-income trading at D.A. Davidson in Seattle. "It not only fell significantly below the important 50 area, but the component numbers were terrible, too."</br></br>New orders fell to 45.7 from 52.6 in November while production fell to 47.3 from 51.9.</br></br>Buying in the wake of the report pushed yields across maturities down more than 0.1 percentage point. The two-year yield fell faster than that of the 10-year note, causing the benchmark yield curve to steepen.