Updated from 11:22 a.m. EST
Treasuries ended the session little changed Friday with a risk premium reintroduced into the yield curve after another quarter-point rate hike and inflation fears pushed bond prices lower all week.
A spate of mild economic reports helped the market hold onto gains, as traders geared up for next Monday's readings on February construction spending and March manufacturing. But trade is likely to remain subdued until next Friday's all-important March nonfarm payroll numbers are released.
The benchmark 10-year note edged higher 2/32 of a point to yield 4.85%. Bond prices and yields move in opposite directions.The 10-year yield touched 4.88% in intraday trading Thursday, the highest since May 14, 2004. Rick Klingman, chief Treasuries trader at ABN Amro, says this is the new key technical level for the note, up from 4.80% prior to this week's rapid rise in yields. The breach of the 4.80% technical level could signal an acceleration in "what is already a fairly dramatic move," say fixed-income strategists at BNP Paribas. The 30-year bond ended the session unchanged to yield 4.90%. In shorter-maturity debt, the two-year note edged higher 1/32 to yield 4.82% and the five-year added 2/32 to yield 4.81%. The yield curve has steepened out, with yields on the long end higher than those on the short end, which is what is expected. Longer-dated maturities usually yield more than their shorter-dated counterparts because it's riskier for investors to loan money for longer periods of time. Lately, the curve has been flat, and has even inverted, which could indicate that investors see more risk in the near term or they don't feel inflation will be as much of a problem going forward, so they don't feel the need for a risk premium on the back end.