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2025.01.0319:31:00UTC+00Treasuries Turn Lower As Manufacturing Index Unexpectedly Increases

After failing to sustain an early upward move, treasuries moved to the downside over the course of the trading session on Friday.

Bond prices pulled back well off their early highs and into negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 2.1 basis points to 4.596 percent after hitting a low of 4.539 percent.

The downturn by treasuries came after the Institute for Supply Management released a report showing manufacturing activity in the U.S. contracted at a slower rate in the month of December.

The ISM said its manufacturing PMI inched up to 49.3 in December from 48.4 in November, although a reading below 50 still indicates contraction. Economists had expected the index to come in unchanged.

With the unexpected increase, the manufacturing PMI reached its highest level since hitting 50.3 in March 2024.

"While the index remains in contractionary territory, improved new orders, low customer inventories, and the potential for tariffs to pull forward additional demand should sustain the positive momentum over the near term," said Matthew Martin, Senior U.S. Economist at Oxford Economics.

The Labor Department's closely watched monthly jobs report is likely to be in the spotlight next week, while reports on service sector activity and consumer sentiment may also attract attention along with the minutes of the latest Fed meeting.

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