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US Treasury yields fall on ECI miss

Traders work in the S&P 500 options pit at the Chicago Board Options Exchange.
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Traders work in the S&P 500 options pit at the Chicago Board Options Exchange.

U.S. Treasury prices rose on Friday, the last trading day in July, after the second-quarter employment cost index missed expectations.

The yield on the benchmark 10-year Treasury notes, which moves inverse to the price, fell about 6 basis points to trade around 2.20 percent, after closing at 2.268 percent. It fell to a three-week low of 2.1930 percent earlier in the session.

Meanwhile, 30-year bond yields turned lower to trade at around 2.91 percent, down about 3 basis points.

The yield on two-year note also fell sharply from about 0.74 percent prior to the release to about 0.67 percent.

U.S. wages and benefits grew in the spring at the slowest pace in 27 years, stark evidence that stronger hiring hasn't boosted pay, according to the Associated Press.

The Labor Department said the employment cost index rose 0.2 percent in the second quarter after a 0.7 increase in the first quarter. Wages and salaries alone also rose 0.2 percent.

Chicago PMI data for July beat consensus estimates, coming in at 54.7.

Read MoreAugust could mean big things for markets and the Fed

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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The central bank kept the door open for a September rate hike in its post-meeting statement this week. However, it didn't provide any clarity as to whether it expects to move its Fed funds target rate from zero in September, as many economists expect, or whether a December rise is more likely, as the futures markets now forecast.

Read MoreThe word 'some' could hold clue for Federal Reserve's rate move

U.S. economic growth data was also released this week. Gross domestic product expanded at a 2.3 percent annual rate, the Commerce Department said on Thursday. First-quarter GDP, previously reported to have shrunk at a 0.2 percent pace, was revised up to show it rising at a 0.6 percent rate.

In the commodity space, U.S. crude futures slipped for asecond session to trade below $48 a barrel in early Asian trade, as mixed economic data from the U.S. overnight weighed on sentiment, although a weaker dollar put a floor under prices.