Yields on U.S. Treasury were largely flat heading into the final trading day of the week, with a key CPI print — due later on Friday — expected to show a jump in headline inflation.

The yield on the 10-year U.S. Treasury note — the benchmark for government borrowing — was little changed at 4.2972% at around 3:45 a.m. ET.  

The 2-year Treasury note yield, which is more sensitive to short-term Federal Reserve interest rate decisions, added almost 1 basis point to reach 3.7932%. The longer-dated 30-year Treasury note yield held steady at 4.8968%.

One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.

The geopolitical shock created by the U.S.-Iran war has upended investor expectations for the Fed's interest rate trajectory.

Inflation remained above the Fed's 2% target even before the war started. The Middle East conflict has complicated the Fed's rate-setting approach, as the central bank weighs the lasting price impact of the energy shock.

The U.S. consumer price index, which was up 0.3% in February, is expected to come in at 0.9% when the latest monthly print is released later, with the oil rise partly pushing the increase.

Similarly, headline annual inflation, which stood at 2.4% year-over-year in February, is forecast to jump to 3.3% for March, according to consensus estimates. The increase, driven by sharply higher energy costs as well as the pass-through of tariffs to consumers, would mark the highest level since May 2024.

On Thursday, the personal consumption expenditure price index — the Fed's preferred inflation gauge — saw a monthly rise of 0.4% in February, in line with expectations and increasing 2.8% year-on-year.

As the Middle East ceasefire agreement remains strained, oil again approached $100 a barrel in early dealmaking on Friday. West Texas Intermediate was last seen up 1.62% at $99.46 per barrel, with Brent crude prices advancing 1.85% to $97.65.