Economic data digestion causes treasury yields to decrease.

On Friday, U.S. Treasury yields were lower due to investors weighing this week's crucial data and assessing the economy's condition.

The yield on the 30-year Treasury bond dropped by more than two basis points to 3.9035% at 3:15 a.m. ET on Friday, remaining close to the 3.9% level it had reached on Thursday. The yield had previously been more than one basis point lower at 4.0853%.

Prices and yields move in opposite directions, with one basis point equal to 0.01%.

U.S. retail sales figures for July exceeded expectations, causing yields to jump 1% in the month, despite economists predicting only a 0.3% increase.

Consumer spending is strong, alleviating concerns about a recession or economic slowdown. Additionally, weekly initial jobless claims were lower than expected on Thursday, easing worries about the labor market.

The labor market and broader economy experienced jitters earlier this month following the release of July's jobs report, which was weaker than anticipated. This led to discussions about whether the Federal Reserve should have already reduced interest rates.

Markets had last firmly priced in a rate cut by the central bank in September, following inflation data released this week. The consumer price index rose 0.2% on a monthly basis in July, as expected, but was up only 2.9% from a year earlier, which was less than forecast.

Federal Reserve officials' comments, particularly at the upcoming Jackson Hole symposium, will be closely watched by investors to determine their view on the economy and interest rates.

On Friday, investors will monitor the latest building permit and housing starts data, along with new consumer sentiment insights.