U.S. Treasury yields fell Friday after a key inflation reading came in near economists' expectations, indicating inflationary pressures may be ebbing slightly.

The yield on the benchmark 10-year Treasury note fell 4 basis points to 1.231% by 4:00 p.m. ET. The yield on the 30-year Treasury bond shed 1.9 basis points to 1.897%. Yields move inversely to prices. One basis point equals 0.01%.

The personal consumption expenditures index — the Federal Reserve's preferred measure of inflation — increased 3.5% in June from a year prior. Economists surveyed by Dow Jones expected a 3.6% jump.

The core PCE index rose 0.4% month over month, below the 0.6% Dow Jones estimate, indicating that inflationary pressures may be easing, at least a bit.

The June reading "was the second consecutive deceleration in the [month-over-month] pace of core-PCE -- consistent with the notion that inflation might have peaked for the time being," BMO Capital Markets' Ian Lyngen said in a note.

Despite the softer-than-expected inflation numbers, the PCE price index's 3.5% gain in June represents the biggest move since 1991.

"Today's report was still a big number even though it was lower than investors' expectations. It will be at least the fall before we really know how transitory the inflation is. Our view earlier in the year was that rates were rising too far, too fast. We've likely overcorrected to the downside, for now," said Jason Blackwell, chief investment strategist at The Colony Group.

The Fed said in its latest policy decision on Wednesday that while progress had been made in terms of its economic targets, "substantial further progress" would be needed on its inflation and employment goals before it considered tightening its ultra-easy monetary policy.

The trend on the 10-year yield is down for the year. Five months ago it spiked above 1.7%, but has pulled back, hitting a new low earlier this month and settling in the 1.25% range since.

—CNBC's Tanaya Macheel and Michael Bloom contributed reporting.