NEW YORK — Investors pulled money out of Treasurys Friday after expectations faded that the Federal Reserve will need to buy bonds to stimulate the economy.

The yield on the 10-year Treasury note jumped to 2.66 percent in afternoon trading, up from 2.50 percent late Thursday. That yield helps set interest rates on mortgages and other kinds of loans.

The price for the note maturing in August 2020 dropped to $99.688 from $101.25 late Thursday.

Fed Chief Ben Bernanke said Friday the central bank will step in if the economy deteriorates "significantly" and if signs of deflation appear. But Bernanke, speaking at the central bank's annual conference, downplayed the threat of a double-dip recession, and maintained his forecast for economic growth next year.

A revision of a key indicator Friday also suggested the economy is faring better than expected. The Commerce Department reported that second-quarter economic growth slowed, but not by as much as economists had forecast.

Gross domestic product grew at a 1.6 percent rate in the April-to-June period, down from the government's earlier estimate of 2.4 percent, the Commerce Department reported. That wasn't as bad as the 1.4 percent expected by economists.

"So the economy is not falling off a cliff as much of the data released over the month suggested," said Kim Rupert, managing director of global fixed income analysis at Action Economics.

Stocks have mainly fallen this month and bond yields have continued to decline after a series of poor indicators suggested the economy was running out of gas. Reports this week on plunging sales of both new and previously occuppied homes delivered the latest blow to confidence in the economy.

The yield on the two-year notes maturing in August 2012 rose to 0.57 percent in Friday afternoon trading from 0.53 percent late Thursday. Its price fell to $99.594 from $99.688.

In other trading, the price on the 30-year bond that matures in August 2040 fell to $103.094 from $106.656, while its yield climbed to 3.70 percent from 3.51.

The yield on the three-month bill was steady at 0.14 percent.