NEW YORK (CNNMoney.com) - Bond prices steadied Friday afternoon after a weaker-than-expected report on fourth-quarter economic growth was offset by a rise in new home sales.

The dollar rose against the euro and yen.

The 10-year note fell 1/32 to 99-28/32 to yield 4.51 percent, relatively unchanged from late Thursday. The 30-year bond climbed 3/32 to 110-02/32, yielding 4.68 percent, down from 4.69 percent in the previous session. Bond prices and yields move in opposite directions.

The two-year note slipped one tick, yielding 4.49 percent. The five-year note was down 2/32, yielding 4.44 percent.

The first reading on U.S. gross domestic product showed that it slowed substantially in the fourth quarter to an annual rate of 1.1 percent, its slowest pace in three years, the government reported Friday.

The broad measure of the nation's economic activity fell from the 4.1 percent growth rate in the final reading of third-quarter growth. Economists surveyed by Briefing.com had forecast a 2.8 percent growth rate in the fourth quarter.

Meanwhile, sales of new homes rose 2.9 percent in December, exceeding Wall Street's estimates, the Census Bureau said.

The annual pace of new home sales increased to 1.27 million in December from 1.23 million in November, which was revised slightly lower. Economists surveyed by Briefing.com had forecast sales would slow to a 1.23 million annual rate.

"The GDP data was weak, but the key is new home sales," Frank Hsu, director of global fixed income at Fimat in New York, told Reuters. "The Fed right now has one thing to worry about, and that is the housing sector. And this number must give it a big relief," Hsu said.

Investors have been scrutinizing recent economic data in an effort to determine whether the Federal Reserve's interest rate hike campaign is coming to an end.

The Fed gathers next week in a meeting that is widely expected to yield the 14th consecutive monetary tightening, bringing the target federal funds rate to 4.50 percent.

There is greater uncertainty beyond that point, although the fresh GDP data may lift primary bond dealers' confidence that a rate hike is unlikely in March.

Inflation hurts bonds as it erodes the value of the fixed-income investment. However, rising interest rates generally help the dollar as they make dollar-denominated securities more attractive to foreign investors.

In currency trading, the euro bought $1.2105, down from $1.2213 late Thursday. The dollar bought ¥117.27, up from ¥116.41 in the previous session.

--from staff and wire reports

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