Treasury yields rose on Friday, climbing back from their historic lows hit on Thursday, easing fears a global slowdown could tip U.S. economy into a recession.
Yields hit a high after a Der Spiegel article said that Germany would boost spending by issuing more debt.
"In terms of the Germans, what has been brewing is that they are prepared to introduce deficit spending," said Quincy Krosby, chief market strategist with Prudential Financial. "This is fiscal policy. It's always been about monetary policy. Now there are discussing fiscal spending. This is a change for them."
A protracted trade war between the world's two largest economies and growing fears about a possible global economic slowdown prompted the 30-year Treasury bond yield to fall below 2% for the first time ever in the previous session.
The 10-year note also slipped below 1.5% on Thursday — registering a three-year low.
The benchmark Treasury yield briefly broke below the 2-year rate on Wednesday, flashing a recession warning that send stocks tumbling. As of Friday, the curve steepened and was no longer inverted.
President Donald Trump said Thursday that he believed the U.S.-China trade dispute would be relatively short, adding China wanted to make a trade deal.
"September, the meeting is still on as I understand it, but I think more importantly than September, we're talking by phone, and we're having very productive talks," Trump told reporters on Thursday.
His comments came after Beijing promised it would counter the latest tariffs on $300 billion of Chinese goods but urged the U.S. to meet halfway in order to secure an agreement.
On the data front, housing starts and building permits for July will be released at 8:30 a.m. ET, with consumer sentiment figures for August set to follow slightly later in the session.
There are no major U.S. Treasury auctions expected on Friday.
— CNBC's Patti Domm contributed reporting.