* ISM data shows factory activity rose in March
* Intermediate-dated notes stable on Yellen comments
* Traders eye Friday U.S. jobs report
By Sam Forgione
NEW YORK, April 1 Longer-dated U.S. Treasuries
yields edged higher on Tuesday after upbeat U.S. manufacturing
data, while intermediate-dated Treasuries yields held steady in
the wake of recent comments from Federal Reserve Chair Janet
The Institute for Supply Management said its index of
national factory activity rose to 53.7 in March. While that was
below economists' median forecast of 54.0, it still marked a
second straight month of accelerated growth.
"We are out of the woods with regards to bad weather," said
Wilmer Stith, fixed income portfolio manager for Wilmington
Trust in Baltimore, Maryland, in reference to frigid
temperatures which hurt economic data at the start of the year.
He said the data led to slight selling pressure on
longer-dated Treasuries. Longer-term Treasuries bonds tend to
decline in price in reaction to positive economic data, which
signal stronger growth and inflation, which erode the value of
longer-dated debt more than short-dated issues.
The 30-year Treasury bond last traded down 22/32
in price to yield 3.6 percent, compared to a yield of 3.56
percent late Monday. The benchmark 10-year U.S. Treasury note
was last down 8/32 in price to yield 2.76 percent,
compared to a yield of 2.72 percent late Monday.
Short- and intermediate-dated Treasuries notes were roughly
unchanged, meanwhile, in the wake of Yellen's comments on
Monday, which were perceived as more dovish than earlier
Yellen gave a strong defense of the Fed's easy-money
policies in a speech to a community investment conference in
Chicago Monday, offsetting comments perceived as more hawkish at
a March 19 press conference.
The March 19 comments, which included a suggestion that the
Fed could raise interest rates earlier than expected, triggered
a selloff in Treasuries, especially short- and
"We're seeing somewhat of a reversal in the negative price
movements," said Stith of Wilmington Trust.
The five-year Treasury note was last down 1/32 in
price to yield 1.74 percent, compared to a yield of 1.73 percent
late Monday. The 2-year Treasury note last traded
roughly flat on the day with a yield of 0.43 percent.
Traders also eyed Friday's U.S. employment report for March,
which could be strong and spur more selling of longer-dated
Treasuries. Employers are expected to have added 195,000 jobs in
March, according to the median estimate of economists polled by
Reuters, up from 175,000 in February.
"We revert to a patient mode pending, mostly, Friday's
data," said David Ader, head of government bond strategy at CRT
Capital Group in Stamford, Connecticut, in a research note.
On Wall Street, all three major stock indexes were higher,
with the Standard & Poor's 500 last up 0.42 percent.
(Reporting by Sam Forgione; Editing by James Dalgleish)