Treasuries Fall After Stronger-Than-Expected Manufacturing Data

U.S. Treasury prices declined on February 2, 2026, after the Institute for Supply Management reported a sharper-than-forecast rebound in manufacturing activity. The ISM Manufacturing PMI rose to 52.8 in January from 49.5 in December, surpassing the consensus estimate of 50.5 and signaling a return to expansion. The upbeat data fueled expectations that the Federal Reserve may maintain higher interest rates for longer, reducing demand for fixed-income securities. The yield on the 10-year Treasury note climbed 8 basis points to 4.32%, while the 2-year yield rose to 4.58%. Bond markets had previously priced in a high likelihood of rate cuts in early 2026, but stronger economic indicators are prompting a reassessment of that outlook.