U.S. government bond prices extended their rally on Friday after a much weaker than expected Chicago purchasing management report.

The two-year Treasury note's yield, which moves inversely to its price, fell below 1.70 percent to the lowest levels since early 2004.

The overall Chicago PMI reading is not good. (Its) employment numbers are pretty ugly and that has lent Treasuries some support. Recent economic releases have been dramatically weaker than expected and the Chicago number adds to that, said John Canavan, market analyst at research company Stone & McCarthy in Princeton, New Jersey.

The Chicago purchasing management index fell to 44.5 in February, below economists consensus forecast for 49.7. (Reporting by John Parry; Editing by Theodore d'Afflisio)