Most Treasuries prices slipped on Thursday after firm data on US consumer spending and regional manufacturing dented hopes the Federal Reserve might soon slow the pace of its rate hikes.
But the day's losses were halved in late trade, a switch analysts said might be linked to month-end buying.
"There's a lot of trading going on. People in Asia are looking for opportunities to buy more, and people generally buy on the last day of the month," said Ralph Axel, senior vice president and fixed-income strategist at HSBC Securities.
Some of that buying occurred at the short end of the maturity curve, allowing short maturities to outperform long-dated instruments.
Analysts tied losses to signs of strength in economic activity.
The benchmark 10-year note US shed 8/32 in price, lifting its yield to 4.12 percent from 4.09 percent late on Wednesday. Yields hit six-month lows of 3.96 percent last week as bulls grew frustrated when that barrier refused to break.
Bond prices initially bounced when the core personal consumption expenditures price index was reported unchanged in August, leaving annual growth at a subdued 1.4 percent. This is one of the Fed's favoured measures of inflation and the latest result was well within the central bank's presumed 1 percent to 2 percent comfort zone for inflation.
On the other hand, the government reported that personal spending, while flat in August, was revised up to 1.1 percent for July, something that caused analysts to nudge up their forecasts for GDP growth in the third quarter.
The final blow to the market was a sharp rise in the Chicago purchasing management's business barometer on Thursday, to 61.3 from 57.3 in August.
"The Chicago PMI sent us back to near the lows, though we had seen the bond market handling some heavy selling before then," said Josh Stiles, senior bond strategist at IDEAGlobal.
The employment index rose to 53.9 from 51.1 in August. That contrasted with the Conference Board's help-wanted index, which was stuck at a soft 37 in August.
With the Chicago area doing better, Stiles said it increased the chances of an upside surprise from the Institute for Supply Management's national manufacturing index, due on Friday. Median forecasts are for the ISM index to dip to 58.0 in September from August's 60.0 reading.
The risk of a stronger result duly weighed on longer-dated Treasury instruments. The new two-year note US2YT=RR was up 2/32, its yield easing to 2.61 percent from 2.62 percent in a $24 billion auction of the new paper on Wednesday.
Five-year notes US slipped 2/32, nudging yields up to 3.39 percent from 3.36 percent. The 30-year bond US fell 14/32, lifting yields to 4.90 percent from 4.87 percent.
The government also reported initial jobless claims for the latest week, which surprised by rising to 369,000 from 351,000 the previous week. This series has been so distorted by weather and seasonal factors recently that it tends to have little lasting impact on markets. The numbers did little to alter expectations the Fed will hike rates again when it meets in November.
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