The United States had been poised to hike tariffs on some $200 billion in Chinese imports to 25 percent from 10 percent after Friday if no deal was reached by then. But on Feb. 24, President Donald Trump announced that he would delay the hike in duties due to advances in negotiations.
"We are heading towards a remarkable, historic deal," White House economic adviser Larry Kudlow said on CNBC on Thursday.
That progress has strengthened investor appetite for risk, pushing prices on Treasuries and other safe-haven assets down as money has flowed into US equities. The Dow Jones Industrial Average was up 0.46 percent on Friday, and the S&P 500 index was up 0.68 percent.
"I'm surprised we haven't had more of a flight to quality given the breakdown of the talks in Vietnam with North Korea. But the market has shrugged that off and is more concerned about a potential Chinese deal," said Ellis Phifer, market strategist at Raymond James.
Trump on Thursday returned to Washington empty handed from talks with North Korean leader Kim Jong Un in Vietnam. He walked away because of Kim's demands to lift all US-led sanctions on North Korea in return for the denuclearization of its Yongbyon atomic complex but not others that the United States knows about.
Yields were also up in spite of weak US manufacturing, personal income and spending data. The ISM manufacturing index slipped in February to its lowest in two years as output and orders slowed.
A report on personal income and spending from the Commerce Department on Friday showed inflation pressures remaining tame, with personal spending falling for the first time in more than three years. The release of this data was delayed by the government shutdown, which Phifer argues has limited its impact on the market.
"A lot of the economic data that's coming out right now is being shrugged off because it was delayed and because there are a lot of expectations for revisions going forward."
The 10-year Treasury yield was last up 4.4 basis points at 2.755 percent, its highest in more than a month. Yields also were higher at either end of the curve, with the two-year yield up 4.5 basis points at 2.557 percent and the 30-year up 4.2 basis points at 3.126 percent.