Treasury prices gain

US Treasury prices gained on Friday after data showed that growth in the American manufacturing sector slowed more than expected in December and oil touched a post-2009 low. The Institute for Supply Management (ISM) said its index of national factory activity fell to 55.5, below economists expectations for 57.6, from 58.7 the month before.
Below average trading volumes after the New Year's holiday was seen as exacerbating price moves, though traders said that volumes were heavier than before the holiday. "On a day where there are probably not many people around, even a small decline is noteworthy," said Jim Kochan, chief fixed income strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin. "It's still a very, very good reading."
The data also suggested that employment in the factory sector rose more in December than analysts had expected, marking the 18th consecutive month of expansion in manufacturing employment sentiment. Benchmark 10-year note yields fell as low as 2.10 percent, the lowest since December 17. Thirty-year bonds dropped as low as 2.68 percent, the lowest since December 16.
The US data came after earlier reports showed that the global economy ended 2014 in a fragile state as factories struggled to maintain growth across Europe and Asia. In Frankfurt, European Central Bank President Mario Draghi indicated in an interview that the ECB would take bolder steps on monetary stimulus. That boosted the dollar and hurt the euro. Falling oil prices have added to concerns about deflation, which has also sent bond yields tumbling.
Brent crude touched a post-2009 low of $55.48 earlier on Friday, before rising back to $56.30. It averaged around $110 a barrel between 2011 and 2013. Investors are next focused on the January 7 release of minutes from the Federal Reserve's December meeting, when the central bank changed its vow to keep interest rates near zero for a "considerable time" to say that it would remain "patient."
The US employment report for December is also due on January 9. Corporate supply is likely to increase next week as companies rush to sell debt before the Fed raises rates, which may pressure yields. "People are preparing for the barrage of new issuance that will come out next week," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.