After ending the previous session roughly flat, treasuries showed a notable move to the downside during the trading day on Thursday.
Bond prices came under pressure early in the session and remained firmly negative throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.4 basis points to 2.688 percent.
The strength among treasuries came as optimism about progress in U.S.-China trade talks overshadowed a batch of largely disappointing U.S. economic data.
A report from Reuters said U.S. and Chinese negotiators have started to outline commitments in principle on the stickiest issues in their trade dispute.
While the U.S. and China remain far apart on demands for structural changes to China's economy, sources familiar with the negotiations told Reuters the broad outline of what could make up a deal is beginning to emerge from the talks.
A separate report from CNBC indicating Chinese authorities could be getting ready to implement more extensive stimulus measures in a bid to encourage economic growth also reduced the appeal of bonds.
Meanwhile, traders largely shrugged off the disappointing U.S. economic data, including a report from the Philadelphia Federal Reserve unexpectedly showing a contraction in regional manufacturing activity for the first time since May of 2016.
The Philly Fed said its index for current manufacturing activity in the region tumbled to a negative 4.1 in February from a positive 17.0 in January, with a negative reading indicating contraction. The index had been expected to slip to 14.0.
A separate report from the Commerce Department also showed a smaller than expected increase in durable goods orders in January.
The report said durable goods orders surged up by 1.2 percent in December after jumping by an upwardly revised 1.0 percent in November.
Economists had expected durable goods orders to soar by 1.5 percent compared to the 0.7 percent increase that had been reported for the previous month.
Excluding a jump in orders for transportation equipment, durable goods orders inched up by just 0.1 percent in December after slipping by 0.2 percent in November. Ex-transportation orders had been expected to rise by 0.3 percent.
The Commerce Department also said orders for non-defense capital goods excluding aircraft, a closely watched indicator of business spending, fell by 0.7 percent in December after tumbling by 1.0 percent in November.
Andrew Hunter, Senior U.S. Economist at Capital Economics said, "The December durables goods data suggest that equipment investment growth slowed further in the fourth quarter, and we expect it to remain weak for most of this year."
"Overall, the durable goods data provide further reason to think that economic growth will soon slow to below its 2% potential pace, which will keep the Fed on hold throughout this year," he added.
The National Association of Realtors also released a report showing existing home sales unexpectedly fell to their lowest level in over three years in January.
NAR said existing home sales tumbled by 1.2 percent to an annual rate of 4.94 million in January after plunging by 4.0 percent to a revised rate of 5.00 million in December.
The continued decrease surprised economists, who had expected existing home sales to climb by 1.0 percent to a rate of 5.04 million from the 4.99 million originally reported for the previous week.
With the third consecutive monthly decrease, existing home sales slumped to their lowest annual rate since November of 2015.
The U.S. economic calendar is relatively quiet on Friday, although traders are likely to keep an eye on remarks by several Federal Reserve officials.
Fed Vice Chairman Richard Clarida, Fed Vice Chairman for Supervision Randal Quarles, San Francisco Fed President Mary Daly, New York Fed President John Williams, and St. Louis Fed President James Bullard are all due to participate in the U.S. Monetary Policy Forum in New York City.
