U.S. government bonds showed signs of stabilizing on Friday, pushing yields down a day after a chaotic session sent them up.
The yield on the 10-year reference Treasury note closed at 1.459%, according to Tradeweb, compared to 1.513% at the close of Thursday. The 10-year yield increased more than 0.3% in February, for the biggest one-month increase since November 2016.
Yields, which rise when bond prices fall, rose sharply on Thursday, with the intensification of a week-long settlement, fueled by bets that the Federal Reserve will start raising interest rates earlier than expected in response to what investors expect to be an explosion of economic growth and inflation later this year.
The 10-year yield recorded its biggest one-day gain since November 9, during Thursday’s session, to end at its highest closing level in a year. The five-year yield, which is more sensitive to the short-term outlook for interest rates, had its biggest gain in one day in more than 10 years.
The higher yields, however, helped investors regain their appetite for Treasury bonds on Friday. Demand was also boosted by being the last trading day of the month, when many fund managers buy Treasury bills to match adjustments in their benchmark bond indexes.