Treasury yields rise to start week; traders look ahead to Fed minutes

U.S. Treasury yields rebounded on Monday following their sharp decline last week as investors absorbed new economic data and looked ahead to the release of the Federal Reserve’s September meeting notes.

The benchmark 10-year Treasury yield was last up about 2 basis points to 5.298%. The yield on the 30-year Treasury bond was 3 basis points higher at 5.659%. The yield on the 2-year Treasury fell nearly 1 basis point, to 4.818%.

One basis point equals 0.01%, and yields and prices move in opposite directions.

Those moves came as traders took note of new data on service sector growth released Monday by the Institute for Supply Management. The ISM report showed that the Purchasing Manager’s Index — a measure of economic activity in the service sector — grew to 54.9 in September, roughly in line with expectations and slightly below the August rate of growth.

The price index within the service ISM rose 1.4 points to 74, putting the 12-month average at its highest since March 2023.

Now, investors are looking ahead to the release of minutes from the central bank’s September policy meeting, due out on Wednesday.

While investors have grappled with a bond market selloff over the past six weeks, a lackluster September jobs report on Friday helped to bring yields down, easing concern about another Federal Reserve rate hike at the bank’s October meeting.

Traders are now pricing in a nearly 82% likelihood that the Fed will keep rates unchanged at its next meeting, according to the CME Group’s FedWatch tool.