The 10-year Treasury yield falls to its lowest degree since October on the shortened vacation buying and selling day

The Yield on 10-year government bonds fell to a new low on Friday that extended into late October, amid a shortened trading day for U.S. markets following the Thanksgiving holiday.

The yield on the 10-year Treasury note fell nearly 5 basis points to 4.194%. At times the yield fell as low as 4.184% and reached its lowest level on October 25th. The two-year government bond lost around three basis points to 4.176%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

Friday was a quiet day on the US data front after a deluge of news earlier in the week. The bond market closes early on Friday as part of the Thanksgiving-adjusted trading schedule.

Earlier this week, the Federal Reserve's preferred inflation measure matched the Dow Jones consensus forecast. Initial jobless claims fell more than expected amid recent signs of labor market tightness.

The Fed's November meeting minutes, meanwhile, suggested that a “gradual” cut in interest rates would be warranted if price increases and labor market data continued to be roughly in line with expectations.

But many economists expect President-elect Donald Trump's threat on Monday to quickly pass tariffs against China, Mexico and Canada will boost domestic inflation – and that the Fed may ease policy more cautiously than they did would have done otherwise.

According to CME Group's FedWatch tool, markets are currently pricing in a 25 basis point rate cut in December with a probability of about 66%.