The 10-year Treasury yield was little changed on Friday as investors weighed the release of dramatically slower, downwardly revised fourth-quarter gross domestic product growth numbers.
The benchmark 10-year Treasury yield rose more than 1 basis point to 4.285%. The 30-year Treasury bond yield was up more than 2 basis points at 4.91%, and the 2-year Treasury note yield — most sensitive to short-term expectations of Federal Reserve policy moves — slid more than 2 basis points to 3.734%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
Investors reacted to much slower economic growth in the fourth quarter than was originally reported.
Gross domestic product, a measure of all the goods and services produced across the sprawling U.S. economy, rose at a seasonally and inflation-adjusted annual rate of just 0.7% in the fourth quarter, according to the Bureau of Economic Analysis.
The first revision of the GDP reading was a sharp step down from the previous estimate of 1.4% and well below the Dow Jones consensus forecast for 1.5%. It also marked a considerable slowdown from the 4.4% growth rate seen in the third quarter of 2025.
At the same time, the latest reading of the personal consumption expenditures index — the Federal Reserve's preferred gauge of inflation — showed prices still ahead of where the Fed would like.
Stripping out volatile food and energy costs, core PCE inflation rose 0.4% in January and 3.1% on a 12-month basis. Fed officials focus more closely on the core reading as a better indication of longer-run trends. The core reading was 0.1 percentage point higher than December.
The report came ahead of the next two-day policy meeting for the central bank, which ends next Wednesday and is the first time officials will have convened since January. Traders are largely expecting the Fed to hold its key interest rate steady at 3.50% to 3.75%, according to the CME FedWatch Tool.
"The latest personal consumption expenditures (PCE) inflation data tells us that the inflation picture wasn't looking good even before the Middle East crisis," said Sonu Varghese, Chief macro strategist at Carson Group, adding that core PCE is "only going to head higher as the energy shock comes through."
"An already large headache for the Federal Reserve is going to turn into an even larger one, and it's likely the Fed will not cut rates in 2026 and may even start talking about rate hikes later this year," he continued.
Brent crude oil, the global benchmark, closed higher at $103.14 per barrel on Friday after closing at $100 Thursday as the U.S.-Iran war headed toward its third week. U.S. West Texas Intermediate crude futures rose to $98.71 a barrel.
The rise in oil prices throughout the week came despite the International Energy Agency agreeing to release 400 million barrels of oil — the largest release in the organization's history. The move higher signaled that investors anticipate the war may persist longer than anticipated.
— CNBC's Jeff Cox, Michelle Fox and Chloe Taylor helped contribute to this report.