By Gunjan Banerji 

Government bonds weakened Friday, continuing a spell of selling that has dominated the first few weeks of the year.

The yield on the benchmark 10-year Treasury note rose to 2.631%, according to Tradeweb, from 2.611% on Thursday, when it crossed its highest level in more than three years. Yields rise as bond prices fall.

Government-bond yields have risen in January after being stuck in a small range for much of 2017, as investors' confidence in the economy and the prospect of rising interest rates spurred selling in Treasurys.

"We've had a really big run in the past two weeks," said Tracy Monroe Nolte, vice president of portfolio analysis at Advisors Asset Management. "There's an expression of concern somewhere in the market about inflation."

Inflation is a primary threat to the value of government bonds because it erodes the purchasing power of their fixed payments.

The 10-year yield rose to as high as 2.644% in early trading Friday, according to Tradeweb, before paring gains after the University of Michigan said that a measure of U.S. consumer sentiment slumped in January for the third straight month.

Government bonds have slipped in recent days even as U.S. lawmakers remain on the brink of a potential government shutdown. The House passed a one-month spending bill on Thursday night, but the plan may not pass the Senate on Friday because of opposition from most Democrats and some Republicans.

Some investors said they were not overly concerned about the prospect of a shutdown.

"We'll probably see some additional volatility" in the bond market, said Mr. Nolte. But, he added, "these things tend to work out last minute."

Write to Gunjan Banerji at Gunjan.Banerji@wsj.com

(END) Dow Jones Newswires

January 19, 2018 11:16 ET (16:16 GMT)

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