U.S. Treasury flat ahead of manufacturing PMI

The U.S. sovereign bonds were trading nearly flat on Monday ahead of manufacturing PMI data. Also, investors keep a close eye on Federal Reserve’s President Williams’s speech in an attempt to estimate the Fed's likely next step to raise interest rate. The yield on the benchmark 10-year bonds, which moves inversely to its price, moved up 0.30 pct to 1.825 pct and the yield on the 2-year bonds climbed 0.48 pct to 0.778 pct by 1235 GMT.

In March, the US ISM manufacturing index rose to 51.8, crossing the breakeven for the first time since August 2015. However, April’s regional factory data implies that manufacturing activity might have slightly weakened last month, according to Societe Generale. The four regional indices recorded an average ISM-adjusted reading of 50.5.

The ISM manufacturing index is expected to have eased slightly to 51 in April from March’s 51.8, noted Societe Generale. Even if the regional measures indicate a much softer print, March’s strong new orders might have averted the index from falling too much, added Societe Generale.

The United States bonds have been closely following developments in oil markets because of their impact on inflation expectations. Today, crude oil prices tumbled by snapping 6-month high as rising production in the Middle East outweighed a decline in U.S. output and a recent slide in the dollar, which has been supporting crude. OPEC supplies rose to 32.64 million barrels per day in April, from 32.47 million barrels per day in March, according to a Reuters survey. That almost matches January's 32.65 million barrel per day, when Indonesia's return to OPEC boosted production to the highest since at least 1997. The International benchmark Brent futures fell 0.91 pct to $46.94 and West Texas Intermediate (WTI) tumbled 0.11 pct to $45.87 by 1235 GMT. Meanwhile, S&P 500 Futures rose 0.24 pct to 2,064 by 1235 GMT.