Treasury yields rise after stronger manufacturing, construction data

U.S. government debt yields rose Monday as strong manufacturing data in the United States and China triggered a pivot toward riskier assets.

The yield on the benchmark 10-year Treasury note rose 6 basis points 2.483 percent, while the yield on the 30-year Treasury bond climbed to 2.876 percent. Bond yields move inversely to prices.

Yields rose in early trading Monday after a U.S. manufacturing industry report showed that activity rose slightly more than expected in March as production, new orders and hiring all accelerated.

The Institute for Supply Management (ISM) said its index of national factory activity rose to 55.3 from 54.2 in February, the lowest level since November 2016. The reading was slightly above expectations of 54.5 from a Reuters poll of 69 economists.

Meanwhile, U.S. construction spending rose for a third consecutive month in February, bolstered by private and public construction projects. The Commerce Department said that spending rose 1 percent to a nine-month high.

"The recent data are promising — they suggest that things were finally bottoming out at the end of the first quarter. Now the question is whether there will be enough momentum in the system to lift growth, particularly in the manufacturing sectors," Nathan Sheets, chief economist at PGIM Fixed Income, wrote in an email.

In China, a report showed that its manufacturing activity expanded unexpectedly in March, a private survey showed, at its fastest pace in eight months. The reports of better-than-expected manufacturing activity helped ease some fears of a widespread growth downturn that has dampened markets in recent weeks.

The U.S. and China have also concluded their latest round of trade talks last week, and are due to meet for further discussions in Washington this week. U.S. officials last week said that China had made proposals on various issues, including forced technology transfers, that go further than previous commitments.

"All eyes will be on the data from China over the next couple of months," Sheets added. "How much stimulus is there in the pipeline? And how will it affect the Chinese economy and the global economy?"

— CNBC's Ryan Browne contributed reporting.

From Lyft to Airbnb, new round of IPOs is no market top: Nick Colas

Nick Colas asserts the rush of tech IPOs does not point to a market bubble, and he has data to help prove it.

The DataTrek Research co-founder lists historical trends one of two reasons why a free fall is unlikely.

"We haven't had a lot of tech IPOs. There were just 52 last year. In the heyday in the 1990s, we got over 250 tech IPOs every year through the back half of that cycle," he said Friday on CNBC's "Trading Nation. "So, even though this feels like a big calendar coming up, it really isn't buy historical norms — particularly those norms that we worry about in terms of tech cycle tops and peaks."

His second reason: Valuations.

"Tech is trading 18 times earnings. That's a little bit rich for the S&P at 16.3 [times], but not as rich as the consumer staples or discretionary or utilities or a couple of other sectors," added Colas. "So tech is a little bit rich, but not as rich as it was in the '90s. It doesn't feel like a set-up like it was in the late 90s."

The year's first major technology IPO is Lyft, which prices on Thursday. Its ride-sharing competitor Uber is due to list on the NYSE the week of April 1. Wall Street is also expecting Airbnb and Pinterest in the coming weeks.

"For the moment, current market valuations should support broadly what these companies are asking for. The issue is going to be both market dynamics," said Colas. "How's the market is behaving? Where's the VIX? Where are the last three IPOs trading?"

His comments came as Wall Street was coping with a steep sell-off. The major stock market indexes saw their worst daily performance since January third on Friday.

Even though Colas is confident there's no bubble, he acknowledges investors could face big disappointments.

"These companies are all remarkably unprofitable. Lyft lost $900 million plus last year, and all of these are cyclical companies, as well, unproven by an economic downturn," Colas said. "Ultimately, buying an IPO is one of the riskiest things that an investor could do."

show chapters From Lyft to Airbnb, investors shouldn't worry the newest tech IPO rush signals a top: Nick Colas    3:44 PM ET Fri, 22 March 2019 | 03:53 Disclaimer