Treasury yields were last higher on Wednesday as investors weighed the state of the U.S. economy and considered the latest developments in the Middle East.

As 4:58 a.m. ET, the 10-year Treasury yield was last up by over two basis points to 3.7638%. The yield on the 2-year Treasury was last less than one basis point higher to 3.6270%.

Yields and prices have an inverted relationship. One basis point equals 0.01%.

Treasurys

Investors parsed through fresh economy data as they assessed the state of the economy in the U.S. ISM’s manufacturing PMI came in at 47.2 for September, slightly lower than the 47.5 forecast by Dow Jones.

On Wednesday, investors will be watching out for ADP’s employment report, which comes before the all-important September jobs report from the U.S. Labor Department’s statistics bureau due on Friday. The data could significantly impact the path ahead for Federal Reserve monetary policy, especially interest rates.

Fed Chairman Jerome Powell earlier in the week indicated two more rate cuts in 25 basis point increments could come from the Fed this year if economic data remained consistent. Powell also said that the recent 50 basis point rate cut from the Fed should not be taken as a signal that the central bank will continue cutting rates aggressively.

Investors also continued to weigh rising tensions in the Middle East and what the situation could mean for global markets and trading. Iran on Tuesday launched a ballistic missile attack on Israel, which came soon after Israel deployed ground forces into south Lebanon as tensions in the region escalated.

Treasury yields had pulled back Tuesday as investors looked to them for safety among the developments in the region.

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