A better-than-expected service sector report helps push Treasury prices down

Treasury prices fall on upbeat service sector data

NEW YORK — Investors sold Treasurys on Tuesday after a report showing that the service sector expanded again in September backed a rosier view of the economy.

The Institute for Supply Management said U.S. service-oriented companies grew slightly faster last month as customer demand improved. That marks the ninth straight month of expansion in an industry that is the nation’s predominant job generator.

The price of the 10-year Treasury note was down 2 cents to $101.19. The lower price pushed the yield up to 2.49 percent. Bond prices and yields move in opposite directions.

The 10-year note reached its low for the year of 2.42 percent on Aug. 25. The yield is a widely used benchmark for interest rates on mortgages and corporate debt.

However, the selling on Tuesday is more profit-taking than an overall change in investor’s outlook for the economy, which remains dim.

“We need to see a lot more economic numbers beating expectations to change people’s perceptions,” said Jason Rogan, director of U.S. Treasury trading at Guggenheim Partners.

Investors also are putting their money into stocks, said John Spinello, bond strategist at Jefferies & Co.

The Dow Jones industrial average rose 168.93 points, or 1.6 percent, to 10,920.20 in early afternoon trading. The Standard & Poor’s 500 index rose 20.54, or 1.8 percent, to 1,157.57.

Traders have pushed Treasury yields lower in recent weeks because they expect the Federal Reserve will try to lower long-term interest rates to spur borrowing and spending.

The two-year note traded around 99.91 at a 0.40 percent yield, compared with 0.41 percent late Monday. The 30-year bond fell 18 cents to 102.75. It paid a 3.72 percent, up from 3.70 late Monday.

The three-month T-bill paid a 0.12 percent yield, unchanged from late Monday.