Prices for U.S. Treasurys fell on Friday, pushing yields to their highest levels in about a month in a half, after the dollar shot up past the key 100-yen mark and spurred selling in longer-dated government debt.
The yen's weakening against the dollar prompted selling of Japanese government bonds, and Treasurys, bunds and gilts "sold off in sympathy with JGBs," said Thomas di Galoma, senior vice president and head of fixed income rates sales at E D & F Man Capital Markets in New York.
The selloff in Treasurys drove yields through some key technical levels, said John Canavan, fixed income analyst at Stone & McCarthy Research Associates, citing resistance at the 3 percent to 3.02 percent area on 30-year yields, the 1.80 percent to 1.82 percent area on 10-year yields, and the 1.20 percent to 1.22 percent area on 7-year yields.
That encouraged more selling, analysts said.
Some selling was related to "huge" corporate supply due to come to market next week, said Todd Colvin, senior vice president of global institutional sales at R.J. O'Brien and Associates in Chicago.
The benchmark 10-year note was down 24/32 in price during the late afternoon in New York, its yield at 1.895 percent, up from 1.814 percent late Thursday.
The 30-year bond fell 1-13/32 in price as its yield rose to 3.090 percent from 3.019 percent late on Thursday.
Bill Gross, manager of the world's largest bond fund, said on Friday the 30-year bull market in fixed income had come to an end, not just in U.S. Treasurys, but "to all bonds," including high yield debt, citing a "gut feeling" that the bull market ended on April 29. That said, the PIMCO Total Return Fund, which Gross oversees, in April increased its holdings in U.S. Treasurys to 39 percent of its portfolio, the highest in a year.
Still, analysts said major questions about the health of the labor market remain unanswered.
"The key thing to watch is employment," said Jim Sarni, managing principal of Payden & Rygel.
"The prospects for employment, the Fed has said over and over again (that) is going to be the determinant of a change in QE and monetary policy," he added.
U.S. Federal Reserve policymakers say they want to see unemployment closer to 6.5 percent from its current 7.5 percent.
The evolution of that jobless rate is a major factor for investors trying to gauge when the Federal Reserve could pare its $85 billion per month in Treasury and mortgage-backed securities purchases, a bid to support the U.S. economy and boost employment.
(Read More: Japan Investors Begin to Stock Up on Foreign Bonds)
Weak economic data had quieted talk about the Fed tapering off those purchases, but it has been revived by the better-than-forecast April employment report released a week ago, upward revisions to payroll growth for prior months and lower numbers of Americans filing for unemployment insurance benefits.
Nevertheless, a well-received auction of 30-year bonds on Thursday indicated that higher yields would likely bring in new buyers next week, market participants said.
"There's much more interest in buying from banks and insurers and other large market participants around these levels," said Jake Lowery, portfolio manager with ING U.S. Investment Management in Atlanta, Georgia. "We saw that come into play in the 10- and 30-year auctions this week and there's likely more buying to be done."
Dan Heckman, senior fixed-income strategist at U.S. Bank Wealth Management in Minneapolis, said Treasury yields had gotten a little too low and that translated into some weakness in the bonds this week after the better than expected April U.S. employment report was released last Friday.
The stronger April employment figures were followed by "the nice improvement in the new jobless claims data released this week," he said. That encouraged people to start to move out of Treasurys, which, along with this week's refunding supply, helped move yields back up to levels to where there will be greater buying interest next week, he said.
Heckman said that while some observers think 10-year yields could rise to 2.25 percent by mid-year, he was more cautious.
"We don't buy that outlook yet. With the payroll tax cut, businesses we talk with get a sense the consumer is a little more cautious here; and we've seen gasoline prices move back up," he said. "There's a limit as to how high yields will go when there is still no inflation threat."
(Read More: Hedge Funds Look to Play High-Yield Bonds, US Stocks)