By Orla McCaffrey 

U.S. government bond prices fell Friday after President Donald Trump wrote on Twitter that China and the European Union "have been manipulating their currencies and interest rates lower" -- as uncertainty about the economic status quo appeared to weigh on investor sentiment.

The yield on the benchmark 10-year Treasury was recently at 2.882%, according to Tradeweb, compared with 2.845% on Thursday. Yields on the two-year Treasury, typically more sensitive to changes in expectations for Fed policy, recently traded at 2.591%, down from 2.593% on Thursday. Bond prices move inversely to yields.

Mr. Trump's statement comes a day after the president said in an interview that he was displeased with the Federal Reserve's interest rate increases this year because higher rates strengthen the dollar and hurt U.S. exports. It marked a rare presidential critique of the Fed. Central bankers have long argued for independence from political pressure, given that they have to make unpopular decisions such as raising interest rates to curb inflation.

"His rhetoric is starting to get the bond market a little bit antsy," said Tom di Galoma, managing director and head of Treasurys trading at Seaport Global Holdings.

Central bank officials voted unanimously to raise their benchmark federal-funds rate by a quarter-percentage point to a range between 1.75% and 2% last month. It was their second rate rise this year, and they penciled in a total of four increases for 2018.

The Fed's aggressive path of projected rate increases contrasts with other major global central banks. The European Central Bank's deposit rate is currently negative 0.4%, as it attempts to stimulate growth, which has slowed this year in the region.

The gap in interest rates has helped the dollar rise, with The WSJ Dollar Index climbing 3.4% for the year through Thursday. The index, which measures the U.S. currency against a basket of 16 others, was recently down 0.6% at a session low. For much of the year bond yields have moved alongside currencies because flows of capital are drawn to higher yielding currencies.

Fed funds futures, which investors use to bet on the direction of interest-rate policy, Friday showed a 59% probability that Fed officials will raise rates at least two more times this year, up from 52% a month ago, according to CME Group data.

Daniel Kruger contributed to this article.

(END) Dow Jones Newswires

July 20, 2018 12:15 ET (16:15 GMT)