US Treasury debt prices climbed moderately on Monday as unusually specific terrorism alerts from the Homeland Security Department gave safe-haven government debt a positive tilt.
Bonds largely shrugged off a report on US factories reflecting both strong output for July and a mild pullback in hiring for the sector. Overall, the market's muted response to both the threat of attacks and the day's economic news underlined a tight trading range that traders said is likely to persist at least until the release of Friday's US July jobs report.
The benchmark 10-year note was up 6/32 in price, lowering its yield to 4.45 percent from 4.48 percent on Friday.
The Institute for Supply Management's business activity index rose to 62.0 in July from 61.1 in June, in line with the median forecast. However, many had been looking for a higher number after the Chicago PMI beat all expectations last week.
Still, the report was upbeat by most standards and there was little follow-through buying of Treasuries in its wake.
"The report sends a strong signal that manufacturing and output will expand at a rapid clip in the third quarter," said Jayanth Nazareth, an economist at J.P. Morgan in New York.
The ISM survey's employment index dipped, but at 57.3 was still strong by historical standards and should not change analysts' forecasts for a sizeable rise in payrolls for July. For now, two-year notes were up 2/32, their yield having eased to 2.65 percent from 2.69 percent on Friday. Five-year notes added 4/32, nudging yields to 3.67 percent from 3.69 percent.
Thirty-year bonds gained 5/32, taking their yield to 5.19 percent from 5.20 percent.
Upcoming supply should also tend to keep Treasury yields from easing much further. The government's quarterly refunding - probably comprised of around $54.0 billion in three-, five- and 10-year notes - is scheduled to take place next week.
The United States raised its security alert level to high on Sunday after intelligence suggested a threat against the International Monetary Fund and World Bank in Washington and the New York Stock Exchange, Department of Homeland Security chief Tom Ridge said.