Treasurys

The yield on US 10-year debt edged two basis point higher to 4.04% after falling to a five-month low Thursday, but still remained on course for a fourth week of declines.

Treasuries climbed across the curve, driving two-year yields down three basis points to 3.51%. Money markets almost fully priced in three Fed reductions by the end of 2025.

In SOFR options, which closely track the Fed's policy path, a number of large positions have emerged that look to benefit from an outsized cut of 50 basis points at next week's meeting.

Investors are anticipating the annual preliminary benchmark revision of US payrolls data. Further signs of softening could further raise expectations for Fed easing.

The attention will now turn to reports on producer prices and consumer prices, due Wednesday and Thursday, for signals of how quickly the Federal Reserve will lower borrowing costs.

Debt markets globally were roiled this week as the yield on the 30-year Treasury rose to almost 5% before easing in the past two sessions.

Yields on two- to five-year notes rose at least two basis points to session highs after the U.S. economy's second-quarter growth rate was revised to 3.3% from 3%, exceeding economist expectations.

Traders boosted wagers on a quarter-point cut next month, pricing in a roughly 85% chance of a move, up from around 65% before Powell spoke.

Traders were watching a slew of data on a bigger-than-expected increased in jobless claims and expanded manufacturing Thursday.

In minutes from the Fed's July meeting, officials highlighted the risks of inflation outweighing concerns over the labor market, which investors overlooked.