Treasury yields pare gains amid attempted military coup

U.S. sovereign bond yields pared gains after gunfire was heard and jets were seen flying in the Turkish capital of Ankara.

The 10-year note yielded 1.55 percent, and the 30-year note yielded 2.26 percent, as the dollar spiked against the Turkish lira.

Earlier in the afternoon, benchmark 10-year U.S. Treasury notes yielded 1.5975 percent during Friday's trade. Thirty-year Treasury bonds yielded 2.3059 percent. Bond prices move inversely to yields (CNBC explains).

Prime Minister Binali Yildirim said a group within Turkey's military had attempted to overthrow the government and security forces had been called in to "do what is necessary."

"Some people illegally undertook an illegal action outside of the chain of command," Yildirim said in comments broadcast by private channel NTV and reported by Reuters.

Prior to the headlines out of Turkey, bond prices traded lower on Thursday, as German Bunds declined and French OATs gained following a terror attack in Nice.

The yield on German 10-year Bunds became positive for the first time since June 23, hitting a high of 0.007 percent. It was last roughly flat at 0.004 percent.

US Treasurys

U.S. Treasurys

Late on Thursday, a man driving a truck mowed down crowds of people in Nice watching a fireworks display to celebrate Bastille Day. French President Francois Hollande says the attack was of a "terrorist nature" and has extended France's "state of emergency" for three months.

Ten-year French OATs traded higher on Friday to yield 0.2240 percent, having closed on Thursday at 0.191 percent.

"Of course, everything today in Europe will be of secondary importance to last night's terror incident in Nice. And the related economic concerns are of lesser relevance to the human costs," Emily Nicol, economist at Daiwa Capital Markets, said in a note on Friday.

"Indeed, with the French economy having proved to be relatively resilient to the previous Bataclan incident, the economic consequences need not be marked, although demand in the French services sector, not least the tourism sector — the world's biggest — might be adversely affected over the near term," she added.

Investors also digested stronger-than-expected U.S. economic data, including June readings of CPI and retail sales.

German Bunds

German Government Bonds (BUND)

U.S. stocks ended Thursday with new highs in both the and the Dow Jones industrial average. If the S&P 500 closes at a new high on Friday, it will be the first full week of new highs for the index since March 1998, according to Standard & Poor's.

The deciding factor could be the top-tier economic data due from the U.S. on Friday. These include June inflation, retail sales and industrial production, as well as the University of Michigan consumer sentiment survey for July and May business inventories data.

Overnight, China posted second-quarter gross domestic product (GDP) growth of 6.7 percent on the year, beating estimates for 6.6 percent by economists polled by Reuters and matching growth in the first quarter.

In the U.S., earnings season was in full swing, with Citigroup and Wells Fargo posting quarterly results. On Thursday, JPMorgan Chase reported earnings that easily beat expectations, while BlackRock's were in line with forecasts.

"If Citigroup comes out and they miss, then it starts to get people a little bit more concerned," Robert Pavlik, chief market strategist at Boston Private Wealth, said Thursday. "But I think as we move a little bit more into earnings season, we'll get some of the other banks falling in line."

Bank poll

Meanwhile, German chemical and drug company, Bayer, had bumped its bid offer to $125 per share for seed giant Monsanto. The seed giant is also looking at purchasing BASF's agro-chemicals unit, according to media reports. The deal is expected to be 75 percent financed by debt, accounting for roughly $46.5 billion in new paper, according to Informa Global Markets.

—CNBC's Patti Domm, Fred Imbert, Kate Rooney, Everett Rosenfeld and Christine Wang contributed to this report.