A sell-off in government debt eased on Friday as oil prices retreated slightly, providing some relief to battered bond markets. European government bonds rallied at the open, with 10-year gilt yields falling 0.04 percentage points to 5.35%, while 10-year Bund yields in Germany slipped 0.03 points to 3.58%. Treasury yields remained flat, with the 10-year hovering around 5.17%. Brent crude dropped 0.6% to $105.95 a barrel after Iran offered Washington a new seven-day proposal to reopen the Strait of Hormuz and restart broader negotiations.

Analysts cautioned that the respite remained tentative. Evelyne Gomez-Liechti, a multi-asset strategist at Mizuho, noted the geopolitical signal remained mixed, pointing to comments by Iranian foreign minister Abbas Araghchi that Tehran was not in a hurry to reach a deal. Yields on 10-year Japanese government bonds slipped 0.01 percentage points to 3.07%.

The recent strength in bond markets follows a sharp sell-off earlier in the week that pushed US 30-year borrowing costs to their highest level in over two decades. David Clewell, a portfolio manager at T Rowe Price, attributed the jump in yields to strong economic growth and higher oil prices, which prompted traders to reassess Federal Reserve rate hike expectations. Marcel Thieliant, head of Asia-Pacific at Capital Economics, cited higher energy prices as the primary driver of shifting sentiment across advanced economies.