2024.03.0119:10:00UTC+00Treasuries Move Notably Higher After Seeing Early Weakness

Treasuries moved to the downside in early trading on Friday but showed a significant turnaround over the course of the trading session.

Bond prices climbed well off their early lows and firmly into positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.2 basis point to 4.180 percent after reaching a high of 4.296 percent.

The rebound by treasuries came following the release of a report from the Institute for Supply Management showing manufacturing activity in the U.S. unexpectedly contracted at an accelerated rate in the month of February.

The ISM said its manufacturing PMI dipped to 47.8 in February from 49.1 in January, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 49.5.

The University of Michigan also released revised data showing consumer sentiment in the U.S. unexpectedly deteriorated in the month of February.

The report said the consumer sentiment index for February was downwardly revised to 76.9 from the previously reported 79.6. Economists had expected the reading to be unrevised.

With the unexpected downward revision, the consumer sentiment index is now below the January reading of 79.0.

The data added to optimism about eventual interest rate cuts by the Federal Reserve, although the central bank is still widely expected to leave interest rates unchanged later this month.

Next week's trading is likely to be driven by reaction to congressional testimony by Fed Chair Jerome Powell and the monthly jobs report.