By Ellie Ismailidou, MarketWatch

Benchmark 10-year yield still near 1-year low

Treasury prices fell sharply Friday, pushing yields sharply lower, as a rebound in risk assets -- mainly global stocks and oil -- led investors to sell safer ones.

Treasury yields had been tumbling for the previous six sessions, plunging to an intraday 3 1/2 -year-low on Thursday, as investors fled stocks and turned to so-called haven assets, namely government bonds and gold, amid a global rout in equities and oil.

The week was marked by volatility. The 10-year Treasury yield , the Treasury market's benchmark, completed a round trip of over 20 basis points in only the last two sessions.

The benchmark yield has dropped more than 50 basis points since the start of the year as investors have fled stocks and turned to assets that tend to preserve capital but offer a yield.

On balance, it lost 10 basis points over the week to 1.746%, according to Tradeweb. On Friday alone it gained 10.4 basis points, its largest one-day jump in 2 1/2 months. One basis point is equal to one hundredth of a percentage point.

Friday's yield increase came amid a strong rebound in stocks (http://www.marketwatch.com/story/dow-futures-up-100-points-as-wall-street-shapes-up-for-a-rebound-2016-02-12) and a 12% surge in oil prices (http://www.marketwatch.com/story/oil-prices-rally-5-after-more-jawboning-from-opec-members-2016-02-12) as a major oil producer again raised the possibility of a coordinated cut in crude output.

The upward trend in yields was enhanced by a report that showed that sales at U.S. retailers rose in January slightly above economists' expectations (http://www.marketwatch.com/story/retail-sales-increase-02-in-january-2016-02-12).

January sales were boosted by purchases of new cars as well as groceries and online shopping, while sales in December were revised higher to show a 0.2% gain instead of a 0.1% decline, which means year-end sales weren't as weak as first estimated.

Treasury yields gained after the news, but were still hovering near their lowest level in a year. A subsequent report that showed that consumer sentiment eased in February (http://www.marketwatch.com/story/consumer-sentiment-weakens-in-february-university-of-michigan-says-2016-02-12)restrained somewhat the rising-yield trend.

At the same time, prices the U.S. paid for imported goods sank 1.1% in January (http://www.marketwatch.com/story/import-prices-drop-11-in-january-on-cheaper-oil-2016-02-12), mainly because of cheaper oil prices.

The yield on the two-year note lost 2.8 basis points over the week but gained 5.2 on Friday to 0.698%. The yield on the 30-year bond , known as the long bond, tumbled 8.2 basis points over the week but gained 7.9 on the day to 2.599%.

Fixed-income strategists cautioned that despite Friday's jump, yields are expected to remain low for the coming months, as negative interest rates in Europe, which means investors must pay to park their money, has increased appetite for the relatively rich returns offered in U.S. government debt.

"I'm not at all surprised to see the Treasury market take a breather here after the torrid pace we've seen," said Christopher Keith, fixed income manager at Adviser Investments.

As the European Central Bank and the Bank of Japan remain committed to ultra low and negative interest rates, the relative value of U.S. Treasurys makes them attractive to global investors, thus pushing prices higher and maintaining low yields, said Robert Tipp, Prudential Fixed Income's chief investment strategist.

In Europe, the benchmark 10-year German yield gained 9.2 basis points to 0.264%, its highest level in a week.

(END) Dow Jones Newswires

February 12, 2016 16:41 ET (21:41 GMT)