Manufacturing strong in August

There is yet more evidence of strength in manufacturing.

Factory orders in the US rose in August.

New orders at U.S. factories rose 2.5 percent in August... The Commerce Department said the increase in factory orders reflected a 3.4 percent increase in demand for durable goods...and a 1.6 percent increase in non-durable goods. The durable goods figure was revised up from an initial August reading of 3.3 percent released last week...

Orders for non-defense capital goods orders excluding aircraft, a proxy for business spending, rose 3.1 percent after dropping 3.9 percent in July...

The inventory-to-sales ratio...fell to 1.18 months -- the leanest level since December 2004 -- from 1.20 months in July.

And global chip sales were up in August too.

Worldwide sales of semiconductors increased sharply in August to $18.6 billion, an increase of 3.2 percent from the $18.0 billion reported in July and an increase of 1.7 percent from the $18.3 billion reported in August 2004, the Semiconductor Industry Association (SIA) reported today. SIA reported that year-to-date semiconductor sales through August, at $144.4 billion, are up by 5.8 percent over the same period of 2004 when total sales amounted to $136.5 billion.

With all this positive news, even Japanese bond yields have gone up.

Japan's 10-year bonds slumped, pushing yields to the highest in almost a year, after stocks surged and a government sale of the debt drew the weakest demand in 19 months...

The yield on the benchmark 1.4 percent bond due in September 2015 rose 6.5 basis points to 1.56 percent, the highest for 10- year bonds since November 2004, as of 6:40 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest debt broker. The price fell 0.555, or 555 yen per 100,000 yen face amount, to 98.621.

Ten-year bond futures for December delivery fell 0.75 to 136.74, the biggest daily drop for a lead contract since March 11.