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US 10-year yields edge closer to 2% after Draghi

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U.S. government debt prices fell on Friday, pushing yields sharply higher after European Central Bank President Mario Draghi suggested rates would not go further into negative territory.

The yield, which moves inversely to the price, on the benchmark 10-year Treasury note climbed to 1.979 percent on Friday, after closing at 1.929 percent Thursday. Two-year yields also rose, last trading at 0.947 percent after earlier going as high as 0.964 percent.

The move also came as U.S. stock and oil prices rose on Friday.

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 ECB revealed a raft of measures to stimulate the euro zone economy at its monthly policy meeting in Frankfurt on Thursday.

The central bank increased its bond-buying program from 60 billion euros per month to 80 billion euros. It also cut its benchmark interest rate from 0.05 percent to an all-time low of 0 percent as well as taking its deposit facility from -0.3 percent to -0.4 percent, meaning banks effectively have to pay more for the ECB to hold their cash overnight.

But the ECB president also suggested that this deeper cut into negative territory could be the ECB's last, and in doing so pushed the euro and government bond yields higher.

"Rates will stay low, very low for a long period of time and well past the horizon of our purchases. From today's perspective and taking into account the support of our measures to growth and inflation, we don't anticipate that it will be necessary to reduce rates further. Of course, new facts can change the situation and the outlook," Draghi told journalists at the press conference at the ECB headquarters in Frankfurt.

"The package announced by the ECB yesterday clearly expands the degree of monetary policy accommodation in place. Despite cutting interest rates further, our take is that the main innovation is steps to bolster credit markets and banks and, as such, the meeting thus marks a re-calibration of policy away from rate cuts and more explicitly toward easing financial conditions and financing costs for the banking system," said chief European macro strategist at RBC Capital Markets, Peter Schaffrik.

A $12 billion sale of 30-year bonds on Thursday that met with strong investor demand helped mute gains in longer dated yields.

The yield on the 30-year Treasury bond, meanwhile, traded around 2.747 percent on Friday, up from its close of 2.7169 percent in the previous session.

On the data front, U.S. import prices fell 0.3 percent last month.

Next week's focus will be on the Federal Reserve's monetary policy meeting, scheduled to take place Tuesday and Wednesday. The U.S. central bank is expected to keep rates unchanged.