After seeing initial strength on Friday, treasuries gave back some ground as the day progressed but still closed higher.
While bond prices pulled back off their best levels, they remained in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.2 basis points to 1.456 percent after hitting a low 1.414 percent.
With the moderate decrease on the day, the ten-year yield ended the session at its lowest closing level in almost four years.
The early jump by treasuries partly reflected their appeal as a safe haven going into the long Fourth of July weekend.
Even though stocks have largely offset the sell-off seen following Britain’s vote to leave the European Union, concerns about the impact of the so-called Brexit continue to linger.
However, treasuries pulled back well off their early highs following the release of a report from the Institute for Supply Management showing a much bigger than expected increase by its index of U.S. manufacturing activity.
The ISM said its purchasing managers index jumped to 53.2 in June from 51.3 in May, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to inch up to 51.5.
With the bigger than expected increase, the ISM’s manufacturing index rose to its highest level since reaching 53.3 in February of 2015.
Rob Carnell, Chief International Economist at ING Commercial Banking, said the number is consistent with a decent but not amazing pace of manufacturing growth.
Traders may keep a close eye on developments overseas next week, although the Labor Department’s monthly jobs report is also likely to be in focus.
Reports on trade and service sector activity may also attract attention along with the minutes of the latest Federal Reserve meeting.
The material has been provided by InstaForex Company – www.instaforex.com