TREASURIES-Yields rise ahead of U.S. manufacturing data

    CHICAGO, Sept 1 (Reuters) - U.S. Treasury yields rose on
Tuesday ahead of the release of manufacturing data and as higher
stock index futures indicated investors were still in the mood
for risk.
    The benchmark 10-year yield was last up 1.8
basis points at 0.7113%.
    "We've got a little bit of risk appetite going on with
stocks a bit firmer," said Kim Rupert, senior economist at
Action Economics in San Francisco.
    She added that the Treasury market was consolidative after
yields fell on Monday largely due to a big month-end duration
index extension.
    "There's still an underlying bid in the market because the
(U.S. Federal Reserve) is going to maintain its zero-rate
posture," Rupert said. 
    Data from the Institute for Supply Management (ISM) survey
at 10 a.m. ET (1400 GMT) is likely to show U.S. manufacturing
activity expanded slightly last month after hitting a 1-1/2 year
high in July.
    It follows data out of China and Europe that showed an
uptick in manufacturing last month.            
    Also looming large this week is Friday's release of August
employment data, which could shed light on the pace of the
economic recovery.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last up less
than a basis point at 0.1348%.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, which is viewed as an indicator of
economic expectations, was last at 57.30 basis points, less than
a basis point higher than at Monday's close.
September 1 Tuesday 9:11AM New York / 1411 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.105        0.1068    -0.005
 Six-month bills               0.115        0.1167    -0.002
 Two-year note                 99-251/256   0.1348    0.004
 Three-year note               99-238/256   0.1489    0.003
 Five-year note                99-234/256   0.2673    0.004
 Seven-year note               100-16/256   0.4909    0.009
 10-year note                  99-44/256    0.7113    0.018
 20-year bond                  97-196/256   1.2519    0.024
 30-year bond                  97-96/256    1.4839    0.032
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         8.75         0.25    
 U.S. 3-year dollar swap         8.50         0.00    
 U.S. 5-year dollar swap         6.50         0.00    
 U.S. 10-year dollar swap        0.50         0.25    
 U.S. 30-year dollar swap      -37.75         0.50    

 (Reporting by Karen Pierog
Editing by Chizu Nomiyama)

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