Benchmark yields fell seven basis points, or 0.07 percentage point, last week, Bloomberg Bond Trader data show, touching a more than two-month low. The benchmark 2.75 percent note due in November 2023 rose 19/32 or $5.94 per $1,000 face amount, to 100 28/32. The yields dropped 38 basis points on the month.

Yields erased earlier gains today after the Institute for Supply Management’s manufacturing index declined to 51.3, from 56.5 in December, compared with the median forecast in a Bloomberg survey for a decline to 56. Readings above 50 indicate expansion. Yields touched 2.61 percent, the lowest since Nov. 8, before declining two basis points to 2.63 percent at 10:59 a.m. New York time.

Little Changed

Strategists and economists have largely stopped boosting their estimates for how high yields will get in 2014. The year- end, weighted-average forecast of 70 participants in a Bloomberg survey has been little changed at 3.42 percent since November, after increasing from 3.14 percent the prior four months.

“The possibility of 10-year yields moving a lot higher was predicated on an out-of-consensus economic scenario, and yet the consensus was for rates to move a lot higher,” Thomas Graff, who manages $3.6 billion of fixed-income assets at Brown Advisory Inc., said in a Jan. 30 telephone interview.

Graff, whose firm is based in Baltimore, said he is favoring government debt over credit-related assets such as corporate bonds for the first time since 2009.

A Labor Department report released Jan. 10 showed the economy added 74,000 jobs in December, trailing the median forecast of 197,000 in a Bloomberg News survey of 90 economists. That was followed by a Jan. 28 Commerce Department report showing durable goods orders declined in December by the most in five months, dropping 4.3 percent. The National Association of Realtors said that contracts to buy previously owned homes in the U.S. plunged in December by the most since 2010.

EM Turmoil

Doubts about the strength of the economic recovery are being compounded by turmoil in emerging markets, with Treasuries benefiting from a flow of money out of emerging markets that last month weakened currencies from Brazil to South Africa.

In China, a report from HSBC Holdings Plc and Markit Economics Ltd. showed that manufacturing contracted in January, raising concern about the growth outlook for a country that buys everything from Chile’s copper to Brazil’s iron ore.