By Gunjan Banerji 

Government bonds strengthened Friday, capping off a turbulent week.

The yield on the benchmark 10-year Treasury note slipped for the second straight day to 2.871% from 2.917% Thursday. Yields fall as bond prices rise.

The yield on the 10-year note hit a multiyear high earlier in the week before receding. Higher domestic yields alongside improvement in some European bonds may have led investors to buy U.S. government debt later in the week, analysts said.

"People are taking advantage of the higher yields that we haven't seen up here in" several years, said Brian Rehling, co-head of global fixed-income strategy at Wells Fargo Investment Institute.

Investors also will be watching for more clues on interest-rate policy at Chairman Jerome Powell's congressional testimony next week.

Recent interest-rate volatility has spurred swings across asset classes, analysts say. The Federal Reserve released minutes from a January meeting this week, triggering swings in both stocks and bonds.

The Treasury market could be tested again in coming weeks, said Mr. Rehling.

Treasury yields have risen in February as solid economic and inflation data have led investors to sell government bonds. Inflation is a primary threat to Treasurys because it weakens the purchasing power of their fixed payments.

Federal Reserve officials signaled growing confidence in the U.S. economy when they met in January, minutes from the meeting showed Wednesday. They supported the Fed's current rate path and could be a precursor to a more aggressive plan.

Investors also have built up a large amount of bearish bets on Treasury futures, according to Bank of America Merrill Lynch. Investors can tap Treasury futures to make directional bets or hedge other parts of their portfolios.

"Extreme positions can be vulnerable to a rapid unwind which in this case could aggravate a rate rally," wrote Bank of America Merrill Lynch analysts in a Feb. 23 note.

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

(END) Dow Jones Newswires

February 23, 2018 16:39 ET (21:39 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.