By Sam Goldfarb

U.S. government bonds extended their recent rally Friday amid growing confidence that the Federal Reserve won't raise interest rates next month and frustration at the slow pace of fiscal policy-making in Washington.

In recent trading, the yield on the 10-year Treasury note was 2.342%, according to Tradeweb, compared with 2.388% Thursday.

Yields fall when bond prices rise.

Since settling at 2.502% on Feb. 15, the 10-year yield has declined four out of the past five trading sessions, moving closer to its 2017 closing low of 2.327%, set on Jan. 17.

Treasurys have rallied before this year only to quickly give back their gains. Expectations for more expansive fiscal policies and tighter monetary policy helped caused a sharp selloff in bonds at the end of last year and remain widespread this year.

Still, they have been tempered in recent months by indications that the Fed and Congress won't move as quickly as some investors had expected in the immediate aftermath of last November's election.

Fed minutes released Wednesday afternoon showed many participants believed that a rate increase could come "fairly soon," but only a few participants felt it is likely to occur at "an upcoming meeting." Meanwhile, investors are still waiting for more details on a tax overhaul plan that President Donald Trump appeared to promise earlier this month.

"There is definitely concern that we don't have anything more in specifics coming out of Trump," said Mary Anne Hurley, vice president of fixed income trading in Seattle at D.A. Davidson & Co. "The longer it takes them to come up with specific policies, the longer it will take to get them through Congress."

Another factor supporting Treasurys has been political uncertainty in Europe and France in particular, where the far right presidential candidate Marine Le Pen is widely expected to make it to the second round of voting in May.

Though polls suggest Ms. Le Pen will lose in a runoff, investors are hesitant to count her out after being caught off guard last year by the U.K.'s vote to leave the European Union and Mr. Trump's victory.

Ms. Le Pen has endorsed pulling France out of the eurozone -- a move that could destabilize financial markets and drive investors to the safety of haven debt, analysts say.

Write to Sam Goldfarb at sam.goldfarb@wsj.com

(END) Dow Jones Newswires

February 24, 2017 11:09 ET (16:09 GMT)

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