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Treasurys hold losses after upbeat consumer data

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U.S. Treasury yields continued to gain on Friday after a report showed U.S. consumer sentiment rose to its highest level since July 2013.

The Thomson Reuters/University of Michigan's preliminary September reading on the overall index on consumer sentiment came in at 84.6, the highest since July 2013, up from 82.5 in the final August reading. The number beat the median forecast of 83.3 among economists polled by Reuters.

Separately, U.S. retail sales rose 0.6 percent in August compared with the prior month, boosted by increased auto buying. Sales have gained some 5 percent over the past year, keeping support under risk-sensitive assets like stocks in the run-up to the FOMC meeting.

"The retail sales data probably is going to keep the Fed on track to terminate their (asset) purchases by October and probably revise the language in their statement and telegraph that Fed rate hikes might be on the way,'' said Dimitri Delis, fixed-income strategist at BMO Capital Markets in Chicago.

The rebound was widely expected after July's subdued reading, with underlying spending supported by the marked decline in gasoline prices.

Yields gained momentum earlier as investors contemplated new sanctions against Russia for its incursions in Ukraine and what it could mean for the global economy.

Benchmark 10-year notes were last down 18/32 in price with the yield at 2.61 percent, slightly below a session high of nearly 2.62 percent, the highest since July 8.

Thirty-year bonds fell 1 8/32 in price to yield 3.35 percent, marking the highest yield since Aug. 1. Friday's jump in yield was the biggest daily rise in almost 10 months.

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Traders shrugged off concerns surrounding the conflict between Ukraine and Russia.

The European Union implemented a new round of penalties against Russia on Friday and the U.S. has indicated it will follow suit with similar measures. Europe's new sanctions further restrict access to foreign capital for Russia's largest state-controlled companies, including top energy firms. Leading Russian politicians were hit with foreign asset freezes and travel bans.

Also in focus is next week's important Federal Open Market Committee meeting, which is looming large as investors ponder when the Federal Reserve will opt to start raising interest rates. The Fed is currently expected to end bond-buying next month and start raising rates in mid-2015.

—By CNBC with Reuters