After an early move to the downside, treasuries showed a significant rebound over the course of morning trading on Tuesday.
Bond prices pulled back off their best levels in afternoon trading but remained firmly positive. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.1 basis points to 1.644 percent.
Treasuries showed a strong move to the upside following the release of a report from the Institute for Supply Management showing a continued contraction in U.S. manufacturing activity in the month of September.
The ISM said its purchasing managers index dropped to 47.8 in September from 49.1 in August, with a reading below 50 indicating a contraction in manufacturing activity. Economists had expected the index to inch up to 50.1.
With the unexpected decrease, the index fell to its lowest level since hitting 46.3 in June of 2009, the last month of the Great Recession.
Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted the contraction continues six straight months of softening in manufacturing.
"Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019," Fiore said. "Overall, sentiment this month remains cautious regarding near-term growth."
The new export orders index slid to 41.0 in September from 43.3 in August, falling to its lowest level since hitting 39.4 in March of 2009.
Economists noted the disappointing data may also reflect the ongoing strike at General Motors (GM), which has also begun to affect production at suppliers.
Meanwhile, President Donald Trump blamed the weak manufacturing data on the Federal Reserve, which he blasted as "pathetic" in a post on Twitter.
"As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected. Fed Rate too high. They are their own worst enemies, they don't have a clue. Pathetic!" Trump tweeted.
Trading on Wednesday may be impacted by reaction to payroll processor ADP's report on private sector employment in the month of September.