Treasury 10-year note yields rose to 3 percent for the first time in two years as a strengthening U.S. employment market increases speculation the Federal Reserve will announce plans to slow its bond-buying program this month.
Treasuries fell, with 10-year yields reaching a two-year high, while stocks rose as data on service industries and jobs added to signs the economy is gaining momentum. The euro slid as European Central Bank President Mario Draghi said rates will remain low.
Spanish 10-year government bonds fell, paring the biggest monthly drop in yields this year, before the nation reveals the results of stress tests on its banks as it seeks to avoid a full financial bailout.
German 10-year government bond yields stayed near the lowest in three weeks before an offering today from the European Central Bank of three-month loans that analysts say may determine demand for sovereign debt.
German government bonds advanced this week, with 10-year yields dropping the most this year, after European Central Bank President Mario Draghi signaled that further interest-rate cuts remain a possibility.