Treasuries End Mostly Lower

Bonds get hit by profit taking on stronger-than-expected data and gains in the Dow

Market jitters were soothed a bit on Friday, mostly thanks to the lack of positioning ahead of Labor Day weekend. Industrial and sentiment data was a mixed bag, which offered a few crumbs for both bulls and bears. The belly of the curve rumbled with a little indigestion, but the long-end pulled out a positive close in the end. July Factory Orders gained a meagre 0.1%, but at least broke the jinx and bested the 2.9% drop in June.

August University of Michigan sentiment was, however, revised sharply lower to 91.5 from 93.5. Yet Chicago Purchasing Managers Index (PMI) data rebounded to 43.5% from 38.0% and welcome gains in leading new orders and backlogs suggested that the industrial heartland may be finally finding bottom, even as other sectors catch up on the downside. This suggests upside risk to next week's National Association of Purchasing Manager's (NAPM) data, though unemployment is likely to rise.

The December bond sagged to session lows of 104-28 on the Chicago news and stock gains, but was soon back near its highs of 105-13 by the close. Reports from Fed Chairman Greenspan and his vice chair, Ferguson, on the Information Age seminar in Wyoming were mostly policy-neutral.