Short-term Treasury prices crept lower though longer-dated debt improved during the session, as investors sifted through data that added to the unclear outlook for the U.S. economy, a day before the government's closely-watched payrolls report.

Yields on 2yr notes rose 4bps to 0.86%. Yields on 10yr notes declined 2bps to 3.61%.

Debt prices turned mixed after one report showed factory orders rose less than expected in Jan, while another said pending home sales dropped at the beginning of the year. 

Bonds had been lower earlier after a pair of reports showed first-time claims for unemployment benefits fell and productivity rose.

The U.S. Labor Dept. said jobless claims fell 29K to 469K in the latest week, in line with the expectations of analysts. The report comes a day before the government's employment report for February.

The economy cut 90,000 jobs last month, analysts said, though estimates vary widely in trying to gauge the impact of severe snowstorms and hiring by the U.S. Census. A separate report showed that unit-labor costs, a measure of inflation, dropped a record 1.7% in 2009, more than had been expected. Productivity also rose in 2009 by the greatest magnitude in 7yrs.

While higher productivity is good for companies' profits, "strong productivity gains are raising the bar that economic growth needs to clear in order to create jobs," analysts at RDQ Economics rote in a note.

Falling labor costs help bonds in that "from the Fed's perspective, there are no inflation pressures here."

Also, the Treasury Dept said it plans to sell $74B in notes and bonds next week, in line with expectations of bond analysts.The government will sell $40B 3yr notes on Tuesday, followed by $21B in 10yr notes the next day. It will finish with $13B in 30yr bonds on Thursday. The amounts are the same as the most recent comparable sales.

Analysts also noted bond-bullish comments BlackRock's Inc.'s Curtis Arledge, chief investment officer of fixed income, made to The Wall Street Journal. Unsteady growth and debt problems facing certain countries make Treasurys appealing, he said.