U.S. Treasurys ended near flat on Friday after dipping during the session when stocks resumed their climb and traders positioned for $72 billion in new government debt supply next week.
Treasurys erased those losses in mid-afternoon, however, when many traders squared positions before heading home as a blizzard moved into the northeastern United States.
The Treasury will sell $32 billion in three-year notes on Tuesday, $24 billion in 10-year notes on Wednesday and $16 billion in 30-year Treasurys on Thursday.
Stronger-than-expected December U.S. trade data helped fuel the gain in stocks and for most of the day reduced demand for safe-haven bonds. The trade data prompted Goldman Sachs economists to raise their GDP tracking estimate for the first quarter by 0.2 percentage point to 2.8 percent.
"Stocks and bonds have returned more to a risk-on, risk-off relationship," said Jake Lowery, portfolio manager on the global rates team at ING Investment Management in Atlanta, with $182 billion in assets under management.
"The S&P approached 1500 intraday earlier this week and 10-year Treasurys approached 1.93 (percent yield)," he observed. "Both of those technical levels held in and that remained the 'risk-off' low for equities and bond yields for the week," he said.
Rick Klingman, a Treasurys trader at BNP Paribas in New York, said the smaller December U.S. trade deficit implied "a decent upward revision" to fourth-quarter GDP, a development that helped stocks and restrained bonds.
A rise in exports and lower oil imports helped push the U.S. trade deficit to its narrowest in nearly three years in December, data showed on Friday. (Read More: Higher US Bond Yields Could Impede Economic Recovery)
A little selling before next week's supply also weighed on U.S. Treasurys for much of the day, but that pressure also dissipated by mid-afternoon as northeast-based traders headed home before the worst of the blizzard hit.
Benchmark 10-year Treasurys rose less than 1/32 in price, leaving their yields at 1.96 percent.
The note's yield was as low as 1.93 percent on Thursday after comments from European Central Bank President Mario Draghi raised speculation that the bank would cut interest rates to stem the region's strengthening currency.
Ten-year Treasurys are now trading in the middle of what traders see as a range between around 1.90 and 2.04 percent.
"We think we are going to trade in this range for the next few weeks," said Mary Beth Fisher, head of U.S. interest rate strategy at Societe Generale in New York. "It's going to take materially better data to get us above 2.04 percent. (The yield) seems to be a range where there is a lot of price support."
A dramatic selloff in late January and early February pushed the 10-year notes to more than eight-month highs of 2.06 percent on Feb. 4. The yield has not held above 2.04 percent for very long, however.
The Federal Reserve bought $1.37 billion in Treasury Inflation-Protected Securities (TIPS) due between 2029 and 2042 on Friday as part of its ongoing bond purchase program.