Treasuries rose as a measure of US factory activity fell more than expected, easing inflation fears fueled by OPEC+'s unexpected plan to cut oil production.
After rising as much as 11 basis points, policy-sensitive two-year yields have reversed course. Energy stocks led gains in the S&P 500, with US crude reaching $80 per barrel. The Nasdaq 100 underperformed major benchmarks as Tesla Inc. fell on data showing that its price cuts boosted deliveries only marginally.
The Institute for Supply Management's gauge of manufacturing activity fell to 46.3 in March, falling short of economists' median estimate of 47.5. Less than 50 indicates contraction. New order and employment indicators have declined.
The government's monthly employment report, which will be released on Friday, will provide a more complete picture of the labor market. Swaps based on Fed interest-rate expectations indicated that a quarter-point increase in May was more likely than not.