On Friday, government bonds started the day on a sour note, but faced a significant rebound as trading progressed.
The initial slump in bond prices was reversed, taking them decidedly into the green. Consequently, the yield on the critical ten-year note fell 7.2 basis points to 4.180 percent, down from the peak of 4.296 percent. The movement of this yield is in direct inverse relation to its price.
The resurgence in government bonds followed the publication of a report from the Institute for Supply Management. The report indicated that manufacturing activity in the United States had contracted at an unexpectedly rapid rate in February.
According to the Institute, its manufacturing production index fell from 49.1 in January to 47.8 in February. Any index score below 50 signifies contraction. Analysts had predicted a slight increase in the index, with a forecast of 49.5.
In addition, the University of Michigan made revisions to previously released data which suggested a surprising downturn in American consumer sentiment for February. The revised Consumer Sentiment Index for February came in at 76.9, down from the originally reported 79.6, despite predictions that the initial figure would be left unchanged. This latest data placed February's Consumer Sentiment Index score below January's reading of 79.0.
The figures boosted hopes about potential interest rate reductions by the Federal Reserve. However, it is still widely anticipated that the central bank will maintain the current rates for the remainder of the month.
The following week's trading pattern is expected to be shaped by reactions to Congressional testimony by Federal Reserve Chair Jerome Powell, as well as the upcoming monthly jobs report.
