"Those fears of inflation have certainly not gone away but attention has shifted back, perhaps temporarily, to the immediate positive drivers which could propel a strong economic rebound.
The benchmark 10-year US Treasury note's yield was down 5.2 basis points at 1.4633%. On Thursday it touched 1.614%, the highest in a year, rocking world markets.
Part of Friday's decline could also reflect dealers convincing clients to buy bonds after poor demand for a 7-year note auction on Thursday.
Benchmark 10-year US borrowing costs rose to their highest in a year at 1.614% overnight, rocking stock markets. Yields are up more than 70 basis points so far this year.
We have potentially strong US data to come later today and rates, credit and equities market are all vulnerable to more correction lower in price on upside economic surprises.
A trader at a Chinese bank said the market was wary of the global reflation trade against the backdrop of rising long-term US Treasury yields, which could be a headwind for the yuan.
The two-year US Treasury yield briefly touched a record low of 0.1049%. Benchmark 10-year yields eased slightly to 1.2771%, pulling away from the highest level since Feb. 27, 2020 as some investors judged that recent selling of fixed income had gone too far.
The benchmark 10-year yield was up 1.4 basis points at 1.1532% in morning trading after it reached as high as 1.188%, its highest since March 20, 2020.
US employment growth rebounded less than expected in January and job losses the prior month were deeper than initially thought.
The benchmark 10-year yield was last up 1.8 basis points at 1.1254%.
The fact they are staying flexible and not acting quickly on the idea of 'oh low rates are great, let's borrow while we can' should be a bigger positive for Treasuries over time.