US bonds tread water; await further Fed tapering hints

U.S. Treasurys

U.S. Treasurys prices moved higher on Friday as data on U.S. producer prices suggested domestic inflation remained below the Federal Reserve's target and may need further monetary stimulus to achieve the central bank's inflation goal.

The Labor Department said its index on producer prices fell for a third straight months due to falling energy prices. The PPI index slipped 0.1 percent in November. Analysts polled by Reuters had forecast the PPI was likely unchanged from October.

The PPI core rate which excludes volatile food and energy prices edged up 0.1 percent last month, in line with economists' expectations.

(Read more: No (price) pressure: Nov PPI falls unexpectedly)

Benchmark 10-year Treasury notes last traded 3/32 higher in price to yield 2.871 percent. Thirty-year bonds traded 10/32 in price to yield 3.877 percent.

Prior to the release of the November PPI report, they were up 2/32 with a yield of 2.868 percent.

—By Reuters