Yields on benchmark 10-year U.S. debt were up 2.6 basis points at 1.6019%.
Mid-term U.S. Treasury yields resumed their upward march on Monday with five-year yields rising to their highest levels since early 2020 as traders positioned for expected central bank rate hikes.
Yields on five-year bonds rose as high as 1.193%, their highest since February 2020, extending a two-week rising streak. They were last up 5.1 basis points at 1.1732%.
Meanwhile yields on 30-year U.S. bonds were down slightly, flattening the gap between five-year and 30-year debt to about 86 basis points, the narrowest level since early last year.
Latest weekly positioning data showed hedge funds have increased their short bets on 2 and 5 year U.S. Treasuries while simultaneously increasing their bullish bets on 10-year debt, indicating investors expect this curve flattening trend to extend in the coming months.
Dollar edges lower after weak U.S. factory production data
The dollar dipped on Monday after data showed production at U.S. factories fell by the most in seven months in September, erasing earlier gains on expectations that the Federal Reserve may be closer to raising interest rates than previously expected.
U.S. manufacturing output was hurt here as an ongoing global shortage of semiconductors depressed motor vehicle output, providing further evidence that supply constraints were hampering economic growth.
Supply disruptions are adding to concerns about high inflation and adding to expectations that the U.S. central bank will need to act to stamp out price increases.
The dollar fell 0.02% to 93.95 against a basket of currencies. It had earlier reached 94.17 as U.S. Treasury yields increased.
Sterling steadies near 20-month high vs euro on Bailey's fresh rate hike signals
Sterling steadied near a 20-month high versus the euro on Monday after Bank of England Governor Andrew Bailey sent a fresh signal that the central bank is gearing up to raise interest rates as inflation risks mount.
Sterling has gained 5.5% versus the euro this year, with analysts pointing to expectations the BoE will raise rates as a major factor supporting the pound, while the British economy has struggled with a shortage of labour, an energy crisis and rising COVID-19 cases.
Overnight, sterling surged again to its highest of 84.25 pence versus the euro since February 2020. By 1450 GMT, it lost some steam, trading 0.1% lower at 84.54 pence.
Versus a strengthening dollar, it edged 0.1% lower at $1.3726, but not far from a one-month high touched on Friday.
Reference: CNBC, Reuters
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