Great US data sends UK borrowing costs over three per cent for first time since July 2011

Some great data from the US. UK 10 year yields have risen above three per cent for the first time since July 2011.

(Tradeweb)

You can see they've been creeping up throughout the day, with a final jump with the US data release. That means effective government borrowing costs have shot up.

US factory orders shrank by 2.2 per cent in July, down from 1.6 per cent (revised up from 1.5 per cent) growth last month.

While that's a big drop, it's a much smaller drop than the plunge expected to -3.3 per cent.

The ISM non-manufacturing purchasing managers' index saw an increase from 56 to 58.6, suggesting that non-manufacturing order books are growing faster than before.

Economists had forecast a drop to 55. The new orders component rose from 57.7 to 60.5. The employment sub-index has shot up to 57.0 from 53.2.

Paul Dales, senior US economist, Capital Economics:

The leap in the US ISM non-manufacturing index in August, to a seven-year high, implies that the economic recovery is gathering a real head of steam.

When taken with the rise in the ISM manufacturing index, it points to an acceleration in annualised GDP growth in the third quarter to around 4.0%, from the second quarter’s 2.5%. We don’t think growth will be quite that good, but demand appears to be strengthening.