After seeing considerable strength in morning trading on Monday, treasuries gave back some ground in the afternoon but still managed to end the day higher.
Bond prices pulled back well off their best levels of the day but still closed in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day down by 3 basis points at 2.134 percent after hitting a low of 2.086 percent.
The early strength among treasuries came as a pair of disappointing economic reports eased concerns about the outlook for the Federal Reserve's asset purchase program.
The Institute for Supply Management released a report showing that its index of activity in the manufacturing sector fell to 49.0 in May from 50.7 in April, with a reading below 50 indicating a contraction in activity. Economists had expected the index to inch up to a reading of 51.0.
With the unexpected decrease, the manufacturing index indicated a contraction for the first time since November of 2012 and fell to its lowest level since hitting 45.8 in June of 2009.
A separate report from the Commerce Department showed a smaller than expected increase in construction spending in April, with a drop in spending on public construction partly offsetting an increase in spending on private construction.
While the data helped to ease recent concerns that the Fed plans to scale back its stimulus program in the near future, treasuries pulled back off their highs due in part to comments from Atlanta Fed President Dennis Lockhart.
In an interview with the Fox Business Network, Lockhart said the state of the economy suggests the central bank should begin considering tapering the asset purchase program
"That's not to say the June meeting, but we are approaching a period in which it can be seriously considered based upon sort of the momentum of the economy, which is not great but nonetheless is moving forward," Lockhart said.
In light of the focus on the outlook for stimulus, economic data is likely to be a big driver of trading throughout the week, culminating in the Labor Department's monthly jobs report on Friday.
On Tuesday, trading could be impacted by the release of the Commerce Department's report on the U.S. trade balance in the month of April. Economists expect the trade deficit to widen to $41.2 billion.
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Market Analysis
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.