On Friday, the treasury market experienced a decline after initially showing some upward movement early in the trading session. Bond prices dropped from their initial highs, moving into negative territory. As a result, the yield on the benchmark ten-year note, which inversely correlates with its price, increased by 2.1 basis points to reach 4.596 percent, following a low of 4.539 percent.
This downward trend in treasuries was influenced by the release of a report from the Institute for Supply Management, which indicated a slower rate of contraction in U.S. manufacturing activity for December. The ISM reported that its manufacturing Purchasing Managers' Index (PMI) slightly rose to 49.3 in December from 48.4 in November. While the reading is still below 50, signaling ongoing contraction, economists had anticipated no change in the index.
The unexpected rise pushed the PMI to its highest level since achieving 50.3 in March 2024. Matthew Martin, Senior U.S. Economist at Oxford Economics, commented, "Although the index is still in contractionary territory, improved new orders, low customer inventories, and the likelihood of tariffs boosting short-term demand should maintain positive momentum."
Looking ahead, the Labor Department's upcoming monthly jobs report is expected to capture significant attention next week. Additionally, reports on service sector activity and consumer sentiment, along with the minutes from the latest Federal Reserve meeting, are likely to draw interest.
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