The US bond market closed early at 2 pm EDT (1800 GMT) and will be shut on Monday for the US Memorial Day holiday. "People are squaring up before the long weekend," said Kathy Jones, chief fixed income strategist at Schwab Center for Financial Research in New York.
Bond yields bounced in a tight range this week as investors made room for a hefty amount of Treasury corporate supply. "People were holding their breath before the Fed minutes and the Opec meeting and breathed a sigh of relief after getting passed them," said Gene Tannuzzo, senior portfolio manager at Columbia Threadneedle in Minneapolis. The benchmark 10-year Treasury yield was down 0.5 basis point at 2.250 percent, ending marginally higher on the week. It traded in a tight seven-basis-point range this week on light trading volume, Reuters data showed.
The drop in the 10-year yield narrowed its gap with the two-year yield to 95 basis points after reaching 93.6 basis points which was the tightest in seven months, according to Tradeweb. This flattening of the yield curve suggests bets on faster US growth and inflation are fading as there have been little progress in Washington on tax cuts and other economic stimulus.
Still Friday's data signaled the US economy was expanding, albeit at a modest clip. This may allow the Federal Reserve to raise interest rates further and to begin paring its $4.5 trillion balance sheet. Gross domestic product grew at a 1.2 percent annual rate in the first quarter, faster than the 0.7 percent pace reported last month, the Commerce Department said. Rates futures implied traders saw an 88 percent chance the Fed would increase rates by a quarter point to 1.00-1.25 percent at its June 13-14 policy meeting, up from 83 percent on Thursday, CME Group's FedWatch program showed.