Treasurys rebound in choppy trade

NEW YORK (CNNMoney.com) -- Treasurys rose Friday, recovering from earlier losses, as ongoing concerns about the global economy overshadowed a stronger-than-expected report on U.S. gross domestic product.

What prices are doing: The benchmark 10-year note was up 5/32 to 97-30/32, pushing the yield down to 3.62% from 3.66% late Thursday. Prices and yields move in opposite directions.

The 30-year bond gained 16/32 to 97-18/32 and its yield was 4.52%. The 2-year ticked up 1/32 to to 99-31/32 and yielded 0.85%.

What's moving the market: Treasurys fell in early trading after the U.S. government said GDP, the broadest measure of the economy, grew at a 5.7% annual rate in the fourth quarter.

The report was better than expected. Economists surveyed by Briefing.com thought GDP would grow at a 4.7% annual rate after it grew at a 2.2% rate in the previous quarter.

But much of the improvement was driven by a turnaround in business inventories, suggesting the economy may not be as strong as it appears.

According to Friday's report, 3.4 percentage points of growth in the fourth quarter came from the change in inventories.

Treasurys recovered in afternoon trading as optimism about the GDP report faded and concerns about global economic growth came to the fore.

Many investors view Treasurys as one of the safest investments available. As a result, prices often rise when investors are nervous about the economic outlook.

"There are a lot of questions about how sustainable the economic recovery will be," said Kim Rupert, a fixed-income analyst at Action Economics. "Investors don't want to stray too far outside quality assets."

Among the worries hanging over the market are new banking regulations proposed by the Obama Administration last week, signs that China could remove some stimulus and the debt woes facing Greece and other struggling European economies.

Friday's advance comes at the end of a mixed week for the Treasury market.

The yield on the 10-year note is on track to end the week roughly where it started, after climbing to a high of 3.68% immediately after the GDP report came out Friday. On Wednesday, it fell to a low of 3.58% as investors braced for the Federal Reserve's policy statement.

What analysts are saying: Traders said the flight to quality is partly in anticipation of next week's heavy economic calendar.

The week ahead brings reports on personal income and spending, national manufacturing data, and the government's all-important monthly jobs report on Friday.

"We have a lot of numbers out next week, which should show improvement or that the economy remains in a steady state," Rupert said. But the data may not be enough to convince investors to abandon safe haven assets, she added.

"Until we see underpinnings of a robust recovery, I think Treasurys will continue to hold their own," Rupert said.