Yield Rebound as Services Data Points to Resilience in US Economy

US Treasury yields rebounded last week after the US Department of the Treasury announced a bond buyback, while strong services data pointed to resilience in the sector despite cooling manufacturing activity. The 2-year yield climbed five basis points to 4.24% as rate-sensitive maturities tracked shifting expectations for the Fed funds rate.

The 10-year benchmark added almost three bps to 4.474%, with the US Dollar Index (DXY) remaining little changed, down 0.02% at 98.84 against a basket of six currencies. The long end saw the 30-year yield finish the week at 5.276%, up 2.5 bps despite the Treasury increasing planned purchases in that sector to $4 billion from $2 billion.

The S&P Global Services PMI improved in August and exceeded forecasts, while the manufacturing index slowed but still showed moderate growth; factory prices were linked to disruption from the US-Iran war and higher energy costs. The next scheduled drivers include Treasury Secretary Bessent's announcement of Iranian sanctions on Monday, the US PCE report, BLS preliminary benchmark revisions, and Fed Chair Warsh speaking at Jackson Hole.