Wholesale prices decline, causing 10-year Treasury yields to slide.

On Friday, the yield on 10-year U.S. Treasury bonds decreased slightly as traders processed a sudden decline in wholesale prices.

At 5:00 a.m. ET, the yield was trading at 4.227%, down 1 basis point from the previous day. The decline in yields was due to traders' reactions to the inflation news and other data points from earlier in the week.

On Thursday, the move lower in notes was reversed, and yields traded slightly higher at 4.69%. Yields and prices move in opposite directions, with one basis point equivalent to 0.01%.

Despite economists expecting a 0.1% increase in the producer price index (PPI) in May, it actually decreased by 0.2%. However, on an annual basis, PPI increased by 2.2%.

Rabobank researchers stated in a note on Friday that both the US PPI inflation headline and core inflation were lower than anticipated, indicating that inflationary pressures are easing.

This week, the figures added to other data releases showed that weekly initial jobless claims reached a 10-month high, while consumer prices came in flat for May, 0.1 percentage point below expectations.

On Friday, Deutsche Bank analysts stated that the combined data had boosted investor confidence in the possibility of interest rate cuts by the U.S. Federal Reserve.

"According to a note from analysts led by Henry Allen, the prospects of rate cuts from the Fed increased after data releases, and the amount priced in by the December meeting was up +6.2bps on the day to 50bps. This led to a fresh rally for US Treasuries on Thursday, which also received a boost from a strong 30yr auction later in the session that saw the highest bid-to-cover ratio in 12 months."

The Fed on Wednesday decided to maintain rates at 5.25%-5.50% and announced that there would be only one rate cut this year.

The University of Michigan consumer survey for June and the U.S. import and export data for May are due on Friday.

— Jeff Cox contributed to this report.