U.S. government debt prices were mixed on Friday as Federal Reserve Chair Janet Yellen said a March interest rate "will be appropriate" according to prepared remarks for a speech in Chicago on Friday.
"Indeed, at our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate," Yellen said.
The likelihood of a rate hike at the March 14-15 Federal Open Market Committee meeting has increased dramatically in recent weeks amid improving economic data and hawkish Fed rhetoric.
The 2-year Treasury yield hit a fresh high going back to Aug 7, 2009, reaching 1.341 percent earlier in the session. The 2-year yield was lower at 1.309 percent following Yellen's remarks.
Fed Vice Chair Stanley Fischer also spoke on Friday and made comments against linking the central bank's policy decisions to specific rules or triggers but did not discuss a March rate hike.
The yield on the benchmark 10-year Treasury note was higher around 2.491 percent, while the yield on the 30-year Treasury bond yield was also higher at around 3.083 percent. Yields move inversely to prices.
According to the CME Group's FedWatch tool, market expectations for a rate hike in March were around 77 percent.
On the data front, Markit services PMI for February came in at 53.8, a five-month low. The ISM non-manufacturing index, meanwhile, hit 57.6.
In oil markets, Brent crude traded at $55.84 a barrel on Friday, up 1.38 percent, while U.S. crude held at $53.25 a barrel, up 1.22 percent.
—CNBC's Fred Imbert and Chris Hayes contributed to this report.