Treasuries rose on Friday, sending two-year yields to the lowest level in nearly four years, on new economic data which led investors to raise their expectations for a recession.

The National Association of Purchasing Management-Chicago said its business barometer fell to 44.5 this month from 51.5 in January. A figure below 50 indicates contraction.

Meanwhile, consumer spending rose 0.4 percent in February after rising 0.3 percent in December, the Commerce Department reported. after adjusting for inflation, however, spending was stagnant for the second straight month.

U.S. stock indexes reflected the concerns, with the Standard and Poor's 500 falling more than 2.5 percent.

The two-year Treasury note rose 12/32 to yield 1.628, its lowest since early 2004. The ten-year note rose 1 10/32 to yield 3.513 at 4:55 p.m.

Inflation