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Treasury prices climbed on Friday, driving yields down, as persisting worries regarding the establishment of the new Italian government helped boost demand for U.S. government bonds and other safe haven assets.
In general, government paper advanced for the week after a dovish set of minutes from the Federal Reserve that observed investors reducing their expectations for a more aggressive rate hike path.
The 30-year bond yield edged down 3.8 basis points to 3.098 percent, adding to a weekly decline of 11.8 basis points, the biggest drop since July 2016.
The 10-year Treasury note fell 4.9 basis points to 2.931 percent, continuing a weekly fall of 13.6 basis points, the biggest of such drop since April 2017.
Yield on the two-year note yield fell 3.2 basis points to 2.480 percent and 6.8 basis points for the week. The drop marks the biggest decline since February 9.
Across the Atlantic, the German 10-year government bond yield edged down 6.1 basis points to 0.405 percent, while the Italian 10-year bond yield surged 5.5 basis points to 2.542 percent, widening the gap between the two bonds by 11.6 basis points to 205 basis points.
A selloff in the Italian government bond market caused investors to flock into German bonds and Treasuries, which are widely perceived as safe-haven investments. Italy's probable prime minister, Giuseppe Conte, was getting ready to finalize a coalition government composed of the anti-establishment Five Star party and the far-right League. Concerns over the composition of the cabinet have persisted as investors continue to be wary that the new government is willing to consider budget-widening policies.
A number of market participants also noted that investors are on edge due to the lack of communication from the incoming members of Italy's government.
