NEW YORK: US government debt prices rose on Thursday as traders piled on bets on more stimulus from the Federal Reserve, whose minutes from its policy meeting showed action might be imminent in a bid to reduce unemployment.
Weaker Chinese factory data and worries about a review of Greece's finances also spurred safe-haven bids for bonds. Benchmark yields fell to their lowest levels in more than a week after touching a three-month high earlier this week.
"It's all on the back of the FOMC minutes saying it's ready to provide more stimulus 'fairly soon,'" said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.
However, a top Fed official said the US economy, although far from robust, does not need further Fed stimulus.
"Going along at this slow pace is not enough to justify gigantic action," St. Louis Federal Reserve President James Bullard told CNBC television in an interview.
The minutes from the July 31-Aug. 1 meeting of the Federal Open Market Committee showed the US central bank's policy-setting group is prepared to deliver another round of monetary stimulus "fairly soon" until the economy strengthens significantly.
The readiness of the FOMC to provide more help for the US economy surprised some traders who had dialed back their expectations on the possibility of a third round of quantitative easing in reaction to somewhat better data on US employment, housing and manufacturing since the last FOMC meeting.
"The QE path is still the one that the Fed is going on," said TD's Goldberg.
Traders have speculated another instance of monetary stimulus will likely be a third round of large purchases of bond, nicknamed QE3 for quantitative easing, but some analysts reckoned Fed policymakers are leaning toward extending the near zero interest rate pledge into 2015 for now rather than quantitative easing.
These analysts said the FOMC preferred to hold back on such a move due to the lingering uncertainties with the European debt crisis and expiration of federal tax cuts at year-end.
Still Thursday's economic data on jobless claims, manufacturing and new home sales supported the notion the economy is not showing "a substantial and sustainable strengthening" -- a condition the FOMC said will likely persuade them to embark on more stimulus.
Benchmark 10-year Treasury notes were up 10/32 in price at 99-19/32 for a yield of 1.668 percent, down nearly 3 basis points from late on Wednesday.
The 30-year bond was up 13/32 higher at 99-8/32, yielding 2.787 percent, down 2 basis points from Wednesday's close.
On the supply front, the US Treasury plans to sell $14 billion of an older five-year Treasury Inflation-Protected Securities issue at 1 p.m. (1700 GMT).
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