The advance estimate of gross domestic product offered insight into the US economy before President Donald Trump's tax cuts took effect. The market response to was muted, with benchmark 10-year note yields moving within a basis point, suggesting investors remain confident in the underlying health of the economy and the Federal Reserve's plan to hike interest rates in March.
"Although the headline missed expectations by about four-tenths of a percent, the composition of growth was pretty strong for the fourth quarter," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.
The GDP number "should give Federal Reserve officials some cover to offer a stronger statement at the January FOMC next week," said LeBas.
Yields rose earlier ahead of Trump's remarks at the World Economic Forum in Davos, Switzerland. Trump warned that Washington would no longer tolerate unfair trade, saying predatory practices were distorting markets.
A decline in US trade is seen as potentially hampering economic growth in the long term, which may have prompted the rise in yields.
Headlines from Davos have been moving the market all week, with shifts in yields following comments about the dollar from US Treasury Secretary Steven Mnuchin and Trump.
Mnuchin on Thursday said a weaker dollar would help US trade balances in the short term, which drove down the currency and pushed up yields. The greenback pared losses and yields fell after Trump contradicted Mnuchin and the Treasury secretary walked back his remarks.
"The long end of the yield curve is acutely sensitive to the performance of the dollar right now. Dollar down, yields up is the direction, which is actually a flip in sign from what we saw in the immediate aftermath of the 2016 election," said LeBas.
In other data on Friday, orders for key US-made capital goods unexpectedly fell in December, suggesting a moderation in business spending on equipment after strong gains in 2017.
At 9:21 a.m. (1321 GMT), the yield on 10-year Treasury notes was 2.634 percent, above Thursday's close at 2.621 percent, while the 30-year bond yield was 2.892 percent, up nearly 1 basis point from 2.880 percent.