US Treasury yields lower on economic data

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U.S. Treasury yields fell sharply on Friday on more weak economic data and after a 30-year auction that met with lackluster demand.

Manufacturing activity growth in New York State accelerated in May after weakening for three consecutive months, as the pace of new orders improved from a multi-year low, a New York Federal Reserve survey showed on Friday.

The New York Fed's Empire State general business conditions index rose to 3.09 in May from -1.19 in April, which had been the first negative read for the index since December.

Economists polled by Reuters had expected the index to rise to 5.0 this month. A reading above zero indicates expansion.

Industrial production for April fell 0.3 percent, while economists expected a 0.1 percent bounce.

U.S. consumer sentiment dropped in May and missed expectations of an uptick, according to a report released on Friday.

The Thomson Reuters/University of Michigan's preliminary May reading on the index was 88.6. It was down from the previous month's reading of 95.9 and missed estimates of 96.

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Benchmark 10-year Treasury note yields fell to 2.1416 percent on Friday, after closing at 2.239 percent on Thursday.

Thirty-year U.S. bond yields fell below the 3 percent handle, trading at 2.9296 percent, after closing at 3.049 percent on Thursday.

The Treasury's $16 billion 30-year sale, the final sale of a total $64 billion in new paper sold this week, met with weak demand on Thursday, resulting in a yield of 3.044 percent, the highest since November last year according to Reuters.

The Treasury sold $24 billion in 10-year notes Wednesday in an auction that was met with strong demand, with new notes yields at 2.237 percent.

Treasury yields have sold off in recent weeks, following heavy selling in German bunds over fears of the longevity of the European Central Bank's bond-buying program.

—CNBC's Reem Nasr and Reuters contributed to this report.