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Yields fall as Greece nears debt deadline

U.S. Treasury yields fell on Friday as Greece moved closer to a deadline to pay back debt, and as investors continued to grapple with whether the Federal Reserve is likely to begin raising U.S. interest rates this year.

Investors are pinning their hopes on an emergency meeting of euro zone leaders next week producing an agreement to unlock aid for Athens and avert a default and exit from the euro zone.

Read MoreGreece talks fail; emergency summit called

"Right now what the market has priced in is a reasonably positive outcome, one that would delay any default, but the markets are still nervous and that's what we're seeing in Treasurys right now," said Millan Mulraine, deputy head of U.S. strategy at TD Securities in New York.

Symbol
Yield
 
Change
%Change
US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
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US 10-YR
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US 30-YR
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Benchmark 10-year notes yields were at 2.26 percent, down from 2.35 percent late on Thursday.

The yield curve also flattened as investors continued to evaluate whether the Fed is likely to begin raising interest rates in September or December, or delay an increase until next year.

Read MoreFinal acts in Greek drama could be rough for markets

"The Fed continues to see two rate hikes this year and it would be hard for them to deliver that unless they start in September," said Mulraine. But, "the market right now is pushing rate hikes further into the horizon, and if we do get some weak data next week I think the market could possibly go all the way to 2016."

The yield curve between five-year notes and 30-year bonds flattened to 148 basis points, down from a high of 151 basis points on Thursday.

San Francisco Federal Reserve President John Williams said on Friday that he wants to see higher inflation before voting to raise interest rates, but added that he thinks rate increases will begin this year.