Treasurys prices dropped Friday after a positive report on durable goods orders caught traders by surprise.
The Commerce Department reported that orders for heavy equipment excluding transportation goods rose 2 percent in August, the best showing in five months. Orders for capital goods, which excludes transportation and military hardware, increased 4.1 percent, after a 5.3 percent fall in July.
Such signs of improving economic activity usually push traders to shift their bets out of safe assets like Treasurys and into riskier investments like stocks.
The 10-year Treasury lost 40.6 cents, dropping the price to $100.12. Its yield moved up to 2.61 percent, compared with 2.55 percent late Thursday.
The 10-year yield had been moving lower after a meeting of the Federal Reserve on Tuesday. Traders interpreted the Fed’s announcement after the meeting as a hint that the central bank would expand its purchases of Treasurys to keep interest rates low and encourage borrowing.
The Fed is currently reinvesting cash from its collection of mortgage bonds into Treasurys. On Friday, the central bank said it bought another $3.89 billion in bonds maturing between 2014 to 2016.
In other trading, the 30-year bond fell $1.06 to $101.37. The yield rose to 3.79 percent, up from 3.73 percent. The 2-year lost 3.12 cents to wind up at $99.84 with a 0.45 percent yield.
The three-month T-bill paid a 0.14 percent yield with a discount of 0.14 percent.