Treasurys Fall, But Post Monthly, Weekly Gain

Treasurys fell Friday after a round of mildly encouraging economic data, but prices were up on the month as investors continued to wade through soft indicators and geopolitical concerns.

The 10-year Treasury note (10_YEAR) yield, which rises as prices fall, was up 1.5 basis points on Friday at 2.658%, after paring most of its rise at the end of the day, but climbed as high as 2.698% in morning trade. The rise in yields comes after three days of declines, with the benchmark yield remaining largely range-bound. The benchmark yield is down 1 basis point this month and 7.5 basis points on the week.

The 30-year bond (30_YEAR) yield rose half a basis point to 3.593% and the 5-year note (5_YEAR) yield rose 2.5 basis points to 1.511%.

Treasurys fell Friday after economic data, but technical factors also played a role in pushing prices lower. Investors purchased bonds in traditional month-end buying, and the benchmark yield also bounced off its 200-day moving average.

"We got just shy of [the 200-day moving average] on Thursday. It just appears to me that's a tough level to get through," said Thomas di Galoma, head of fixed income rates at ED&F Man Capital Markets.

Earlier Friday, data ticked upward, helping push Treasurys lower, with the market continuing to be skeptical that recent soft numbers indicate a slowdown in underlying economic growth. Weak data have been chalked up to cold weather, which is thought to temporarily put a damper on growth, but have little residual effect on the economy.

"Data still has not been clean enough to move us out of range. In the end it will come down to whether current yield levels continue to attract buyers," said Tom Tucci, managing director and head of Treasury trading at CIBC World Markets Corp., in a note.

The Commerce Department lowered its estimate of GDP in the fourth quarter to 2.4% from an earlier reading of 3.2%. Despite the downward revision, which reflected less consumer spending, the data matched expectations of economists polled by MarketWatch.

James Bullard, president of the St. Louis Federal Reserve, said in a television interview Friday morning that the growth data doesn't shake his confidence in the economy. "I'm not sure it makes me any less optimistic about 2014," Bullard said on CNBC.

Another indicator showed a rise in a Chicago business barometer. The Chicago PMI climbed to 59.8 in February from 59.6, beating consensus economist forecasts of 56.

The University of Michigan and Thomson Reuters consumer sentiment gauge rose to 81.6 this month, compared with 81.2 last month. Economists had expected a February reading of 81.8. An index of pending home sales also rose 0.1% to 95 in January from 94.9 in December.

Charles Plosser, president of the Philadelphia Federal Reserve, echoed the market's economic outlook on Friday, saying that it will take a few months to understand how much the weather is interfering with growth. He said the outlook is still bright.

Federal Reserve Governor Jeremy Stein also said Friday that fixed-income funds bear "careful watching" for signs of financial instability. Stein's comments were in response to a paper that suggested non-bank institutions could cause risk.