Treasury yields fall after Fed vice chairman says central bank is getting closer to neutral rate

Treasury yields fell on Friday after a top Federal Reserve official said the central bank was getting closer to reaching its neutral overnight rate.

The yield on the benchmark 10-year Treasury note was lower at 3.072 percent, while the two-year note yield traded at 2.808 percent. Bond yields move inversely to prices.

In an interview with CNBC's Steve Liesman, Fed Vice Chair Richard Clarida said the Fed is close to being "neutral" on interest rates. Clarida also said the central bank needs to be data dependent when hiking rates in the future.

"As you move in the range of policy that by some estimates is close to neutral, then with the economy doing well it's appropriate to sort of shift the emphasis toward being more data dependent," Clarida said during a "Squawk Box" interview, his first public comments since being confirmed in September.

Investors also bought Treasurys amid political turmoil over Brexit and uncertainty surrounding the outcome of U.S.-China trade talks.


Fears that the United Kingdom could soon leave the without a solidified separation deal mounted again, sending the British pound reeling to its against the euro since October 2016 on Thursday. Prime Minister Theresa May has endured a string of resignations from her cabinet in recent days as her advisors split over her efforts to broker a deal with the EU.

"The risk-off environment will persist until some positive political developments occur. One such development predictably worsened this week, as Brexit turned ugly," strategists at MRB Partners said in a note to clients Friday. "The odds have increased that a hard Brexit or Labour Party government might occur, both of which will bring forward a bursting in the countries' debt/housing bubble."

Back home, investors continue to monitor developments in U.S.-China trade talks. On Thursday, a senior Trump administration official told Reuters that China's written response to U.S. demands for trade reforms is unlikely to trigger a breakthrough at talks between President Donald Trump and Xi Jinping later this month.