Additionally, a government inflation report showed a decline in December, stoking investor appetite for Treasurys, pushing their yields lower. The yields on the benchmark 10-year U.S. Treasury notes fell 3.2 basis points, settling at 2.699 percent, while holding below a two-week peak reached earlier in the week. U.S and China officials made more progress on straightforward issues such as working out the details of Chinese pledges to buy a "substantial amount" of U.S. agricultural, energy and manufactured goods and services, sources said.