US Treasury yields lower as investors look ahead to 2018

Key Points
  • Trading has been lighter than usual this week as investors get ready for the new year
  • No major economic data or auction announcements are due out Friday

U.S. Treasury yields traded mostly lower Friday, the last trading day of the year, as investors awaited a batch of data due next week.

The bond market will close early at 2 p.m., ET, and will be closed on Monday for the New Year's Day holiday.

The closely watched employment report for December is set for release next week, as are numerous manufacturing and service sector releases.


The yield on the benchmark 10-year Treasury note was lower at around 2.42 percent, while the yield on the 30-year Treasury bond was little changed at 2.76 percent. Bond yields move inversely to prices.

Two-year note yields have risen 58 percent this year in their largest increase since 2014 to 1.90 percent, according to Reuters. The newswire also said the yield curve between two-year and 10-year notes fell to 50 basis points on Wednesday, the flattest level since Oct. 2007.

Trading volumes have been light this week. The market has been focused mostly on $88 billion in new short and intermediate-dated supply, which was sold to mostly below average demand.

"Next week will be very busy," analysts at NatWest Markets wrote in a note on Friday. "There is a ton of top tier data out as well as the potential for political news if Trump kicks the year off with a strong drive for infrastructure spending."

The Federal Reserve has indicated that an additional three increases are likely next year, though interest rate futures traders are pricing in only two. The U.S. central bank will release minutes from its December meeting, when it raised rates for the third time this year, on Wednesday.

An uptick in Treasury supply, which is expected to initially be concentrated in bills and shorter-dated notes, is also a key focus for investors as the U.S. Treasury makes up for declining bond purchases by the Fed.

— Reuters contributed to this report.