Most U.S. Treasury prices edged higher on Friday, though long bond prices rallied, as investors focused on inflation concerns, two days after the Federal Reserve played down a recent uptick in consumer price pressures.
Benchmark 10-year notes were last down 2/32 in price to yield 2.63 percent, up from 2.62 at mid-day on Friday. The notes yielded 3 percent at the beginning of the year. The 30-year bond rose 7/32 in price to yield 3.46 percent, up from 3.45 earlier on Friday. The saw no change in price to yield 0.46 percent, unchanged from Friday's mid-day trading.
The Fed took a more dovish tone than many expected at its June meeting, leading to volatile changes in trading positions, even though benchmark 10-year yields on Friday ended little changed from before the meeting.
Read MorePros: Two-year tenure for Yellen?
The long-dated yield curve steepened to two-week highs early on Friday as investors focused on the prospect of higher inflation, before buying of 30-year bonds erased some of the move.
"There's the thought I think that maybe (the Fed) will let inflation run a little bit higher and not raise rates,'' said Dan Mulholland, managing director in Treasuries trading at BNY Mellon in New York.
Data on Friday showed that higher energy costs pushed Canada's annual inflation rate to a 27-month high of 2.3 percent in May.
Treasury yields have fallen this year despite a broad expectation that they would rise, with short-covering by investors that made bearish bets heading into the year seen as a large driver of the rally.
Some investors have been unwinding these losing positions, however, which may be creating bond weakness.
"We're getting the feeling that some of the shorts are being pared back, which means that positioning is becoming more balanced and that's consistent with the modest increase in yields that we've seen in the last few days,'' said Boris Rjavinski, an interest rate strategist at UBS in New York.
"People that are stuck in these bad bearish trades are coming to a realization that there will be no major relief in sight in the following few weeks,'' Rjavinski said.
The curve between five-year notes and 30-year bonds flattened to 175 basis points, after earlier rising to a two-week high of 179 basis points. It is up from a five-year low of 165 basis points on Monday.
Investors will be focused on a number of indicators due next week, which cover housing, manufacturing, durable goods, consumer confidence and gross domestic product.
The Treasury is also due to sell $94 billion in new debt, including $30 billion in two-year notes on Tuesday, $35 billion in five-year notes on Wednesday and $29 billion in seven-year notes on Thursday.
—By Reuters. CNBC.com contributed to this report.