Long-dated Treasury yields pared losses on Friday after Federal Reserve Vice Chairman Stanley Fischer said it is still too early to tell if the recent volatility in equities has made a September rate hike more or less compelling, indicating that the lift could still happen next month.
Short-term yields turned positive on the news, with the two-year note yield up 3 basis points to 0.724 percent. Earlier, it rose to its highest in more than a week at 0.735 percent—near its highest level of the year.
Yields were volatile earlier on Friday, with benchmark 10-year Treasury yields bouncing to 2.185 percent, near their session high, after falling as low as 2.13 percent. The 10-year note yield fell to its lowest since April earlier this week as fears of a global growth slowdown gripped the market and spurred widespread risk aversion.
"There could be a tendency for bonds to sell off a bit, said Dan Heckman, senior fixed-income strategist at U.S. Bank Wealth Management. "We're in that volatile stage where the market is going to be pretty nervous going into the August jobs report next Friday, because I think that's going to be the key decider of whether the Fed ultimately decides to move off of zero or not."
The wild price swings in stocks and bonds could intensify as we draw closer to the Fed's meeting on Sept. 16-17, said Heckman, who added that news out of global markets could dictate the direction of Treasurys in the upcoming week.
On the long end of the yield curve, 30-year Treasury bonds pared earlier gains, bringing the yield to 2.91 percent and off a session low of 2.87 percent.
Traders said they expect the global market to remain volatile going into September as uncertainty surrounding China and the Federal Reserve continues to weigh on investor sentiment and market returns.