The 10-year Treasury yield shot to the highest level in over a year on Friday, a sign of optimism in an economic comeback but also a reflection of heightened inflation fears after the enactment of the $1.9 trillion stimulus package.

The yield on the benchmark 10-year Treasury note advanced 10 basis points to 1.626% at around 4:00 p.m. ET and briefly reached 1.642%, its highest level since February 2020. The yield on the 30-year Treasury bond rose 10 basis points to 2.388%. Yields move inversely to prices and 1 basis point equals 0.01%.

"Adding to the bond bearishness was the update from Biden on the timing of 'back to normal'. The President has outlined a path out of the pandemic that would return the US to some semblance of normality by the Fourth of July," Ian Lyngen, rates strategist at BMO Capital Markets, wrote in an email Friday.

"While last week saw a meaningful challenge to the 'Friday afternoon bears' pattern which has been evident throughout much of this year, as we ponder the information on offer, there is little to dissuade the drift higher in yields aside from residual price action in other markets."

The yield curve between the 2-year yield and the 10-year hit a high of 1.486%, its widest spread since September 2015.

The Treasury yield curve is the difference in rates between various bond maturities. When it steepens, it's viewed as a positive sign for the economy. Meanwhile, a flattening curve is seen as a warning for economic weakness.

The moves in yields dented U.S. stocks with the S&P 500 dropping 0.3%. The technology-heavy Nasdaq Composite lost more than 1% on worries of rising interest rates.

Treasury yields climbed after Biden signed the $1.9 trillion coronavirus relief package into law on Thursday afternoon.

The plan will send direct payments of up to $1,400 to most Americans. Direct deposits will start hitting Americans' bank accounts as soon as this weekend, White House press secretary Jen Psaki said Thursday.

In addition to announcing his plan to make Covid vaccines available to all adults aged 18 and above, Biden said in his first primetime address to the nation on Thursday evening, that Americans should hopefully be able to gather in small groups to celebrate the Fourth of July.

Yields were also higher after the number of weekly new jobless claims came in lower than expected on Thursday, totaling 712,000 for the week ended March 6, below the 725,000 estimate.

The 10-year yield has risen rapidly recently, shooting up from 1% since the end of January, amid concerns about rising inflation. These concerns have been compounded by fears that the U.S. government's fiscal relief package, alongside the reopening of the economy, could stimulate it too quickly and cause a surge in prices. 

Investors will be watching for next week's Federal Reserve decision on interest rates and commentary about the central bank's stance on the rising bond yields.

"If the bond market selloff intensifies leading up to the March 17^th FOMC decision, the Fed may finally have to push back against the move in Treasury yields," Edward Moya, senior market analyst at OANDA told clients. "The Fed has clearly stuck to the script that tighter financial conditions or disorderly markets would warrant action and if yields maintain a skyrocketing trajectory, they will become more vocal."

There are no auctions due to be held Friday.

— with reporting from CNBC's Jesse Pound, Yun Li and Tom Franck.