Traders work on the floor of the New York Stock Exchange on Wall Street in New York City.
U.S. Treasury yields surged higher on Tuesday as investors responded to strong U.S. economic data by betting on further rate hikes from the Federal Reserve.
The yield on the benchmark 10-year Treasury note hit a daily high of 3.353%, adding roughly 16 basis points before settling around 3.347% for its highest close since mid-June. The yield on the 30-year Treasury bond gained more than 14 basis points to 3.493%, hitting its highest close since 2014.
The yield on the 2-year Treasury note jumped 10 basis points to trade at 3.505%. The short-term note climbed to 3.55% last week, notching its highest level since 2007. Yields move inversely to prices, and a basis point is equal to 0.01%.
On the data front, the Institute for Supply Management's non-manufacturing PMI figure for August came in better-than-expected at 56.9, rising month over month. Economists surveyed by Dow Jones were expecting a reading of 55.5. Yields extended their gains for the session after the report was released.
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The data points come amid persistent worries about an economic slowdown, with investors monitoring whether the Fed is likely to continue hiking interest rates at an aggressive pace in a bid to tame soaring inflation.
The strong services data could be a sign that the Fed will have more room to hike rates without the U.S. economy falling into a recession.
