10-year US Treasury yields fell Friday morning, but remained above 1.4% after climbing to 1.6% in the previous session.
The yield on the benchmark 10-year Treasury bill fell to 1.489% at 3:30 a.m. ET. The yield on the 30-year government bond fell to 2.276%. Revenues move inversely with prices.
On Thursday, the 10-year yield rose more than 16 basis points to 1.614%, the highest level since February 2020 and more than half a percentage point higher than at the end of January.
The move made investors nervous and put stock markets under pressure, with the Nasdaq taking its largest one-day loss since October.
The spike in 10-year yields, used as a measure of mortgage rates and car loans, was driven by expectations of improving economic conditions as coronavirus vaccines are rolled out, and fears of higher inflation.
The US House of Representatives will approve the $ 1.9 trillion Covid spending package by Friday, bolstering expectations of economic recovery.
However, Wells Fargo strategists said in a note on Thursday that they believed that “there is a greater likelihood that the Fed will have to try to suppress the recent rate hike.”
Meanwhile, Hans Mikkelsen, credit strategist at Bank of America, said that since the summer, economists had “consistently underestimated economic growth to an unprecedented degree.”
“There seems to be a real risk that the Fed cannot remain moderate for much longer and that transition could lead to wider credit spreads,” he said.
Looking ahead, data measuring U.S. personal income and spending growth in January will be released Friday at 8:30 a.m. ET.
January data for consumer personal expenditures, which tracks changes in the cost of goods and services purchased by consumers and prefers inflation by the Federal Reserve, is also expected at 8:30 a.m. ET.
The latest lectures from the University of Michigan on US consumer confidence for February are expected at 10 a.m.ET.
There are no auctions on Fridays.
CNBC’s Patti Domm and Bob Pisani contributed to this report.