NEW YORK: US Treasury yields edged higher on the day but closed lower on the week on Friday as concerns about the spread of COVID-19 variants and rising volatility in the stock market boosted demand for the safe haven debt.

The spread of the coronavirus Delta variant has raised fears that it will slow economic normalization, with many workers likely to continue to work from home.

"You're probably going to see slower growth, economic numbers are going to be somewhat softer over the course of time," said Tom di Galoma, managing director at Seaport Global Holdings in New York.

At the same time "stock market volatility has been a lot higher recently and ... the month of August, especially the last couple of weeks, it's a very strong seasonal for lower yields, so that's another factor," di Galoma added.

Benchmark 10-year yields rose two basis points on the day to 1.260%, but are down from 1.283% last week. They fell to 1.127% earlier this month, which was the lowest since February.

Trading was choppy with many traders and investors out for August summer holidays.

"Today's selling in longer Treasuries is on light volume," Jim Vogel, interest rate strategist at FHN Financial, said in a report.

Inflation expectations also dropped sharply this week as investors speculated that price pressures should moderate.

Breakeven rates on five-year Treasury Inflation-Protected Securities fell to 2.45% and are down from 2.57% last Friday.

The Federal Reserve is expected to taper bond purchases later this year, which should dampen some inflation pressures.

The US central bank is not likely to begin this process in the next few months, however, and it is likely to reduce the purchases at a slow rate.

"I don't think it's going to be implemented very quickly and I don't think that it is going to be a huge reduction in the day to day QE that they've been doing. They'll reduce it, but it's not going to be substantial," di Galoma said.

Dallas Fed President Robert Kaplan, among the US central bank's most forceful supporters for starting to reduce support for the economy, said on Friday he may need to adjust that view if the Delta variant slows economic growth materially.