U.S. Treasury yields stabilized on Friday, having reversed Thursday's rise to multidecade highs, as elevated yields attracted investors. However, the gap between French government bonds and their German peers continued to rise, surging to multiyear highs due to fiscal and political concerns.

The ten-year Treasury yield traded 0.6 basis points lower at 5.226% in midmorning European trade, staying below a peak of 5.344% hit on Thursday, the highest since 2002, LSEG data showed.

French 10-year government bond yields jumped to their highest since 2002 at 4.989% while 10-year German government-bond yields dropped sharply, LSEG data showed.

The spread between French and German 10-year sovereign bond yields jumped to its highest since November 2011 as a result, reaching 158.67 basis points. This came as Thursday's French government 2027 budget, containing 43 billion euros ($48.34 billion) in cuts and cost savings, failed to restore investor confidence.

The leap in the French bond spread, which has risen from levels around 84 basis points in early September, is "a clear indication that the budget details announced in parliament did not go down well with investors," MUFG's head of research for global markets EMEA Derek Halpenny said in a note.

The cost of insuring French government bonds against default also jumped. Five-year French credit default swaps climbed to 81 basis points, the highest in a number of years, S&P Global Market Intelligence data showed. This is sharply higher compared with a level of around 33 basis points at the start of September.

Whether the French government will be able to implement the planned cuts is keeping markets on edge due to disagreements between political parties. Over the past two years, the negotiations have blown past the end-of-year deadline with lawmakers voting to oust prime ministers who pushed for cuts.

Treasurys began to recover on Thursday afternoon as global risk-off sentiment caused investors to rush into safe-haven assets, Deutsche Bank Research strategists said in a note.

Still, U.S. fiscal concerns also linger and German Bunds performed better than their U.S. counterparts on Friday.

Ten-year German Bund yields dropped 12.4 basis points to 3.409% as investors sought safety amid concerns about France.

"Bunds may have finally moved back into 'safe haven' mode, both within the eurozone and relative to U.S. Treasurys," LBBW analysts said in a note.

Markets awaited U.S. non-farm payrolls data due to be released at 1230 GMT to gain clues on the potential pace of future interest rate rises by the U.S. Federal Reserve.

"A soft but not too soft number would be the sweet spot for the markets," Jefferies' chief European economist Mohit Kumar said in a note.

Federal Reserve governor Philip Jefferson said Thursday that the central bank might need more time to assess the direction of the economy before making any additional policy adjustments.

This caused investors to cut back their expectations of a Fed rate hike in October to a probability of just 24% on Friday, from over 70% priced at the start of the week, LSEG data show.