U.S. Treasurys prices fell on Friday after unexpectedly better housing data pointed to a strengthening U.S. economy, pulling benchmark 10-year yields up from six-month lows.
U.S. housing starts jumped in April and building permits hit their highest level in nearly six years, offering hope that the troubled housing market could be stabilizing.
"Housing starts were better than expected. They were higher in just about every region, with the Midwest having the biggest jump. That's causing the sell-off," said Michael Chang, an interest rate strategist at Credit Suisse in New York.
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Reduced safe-haven demand for Treasuries as bonds from peripheral European countries, including Spain, stabilized, also led Treasurys yields higher.
"The pressure on a lot of peripheral markets is gone and we are starting to see some buying in those markets," said Tom Di Galoma, head of fixed income rates at ED&F Man Capital Markets in New York.
Benchmark 10-year notes fell 9/32 in price to yield 2.52 percent, up from a low of 2.473 on Thursday, the lowest since Oct. 30. Thirty-year bonds dropped 10/32 in price to yield 3.343 percent, after falling as low as 3.303 percent on Thursday, the lowest since June.