NEW YORK: US Treasury yields fell on Friday as European government bond yields fell to record lows, a day after the European Central Bank said it would launch new stimulus in an effort to boost sagging regional growth and stave off deflation.
The ECB said it would buy 60 billion euros ($67 billion) of assets a month from March, focusing mainly on sovereign bonds. Bond purchases will cover maturities of up to 30 years - longer than many in the market had expected.
"We're trading higher in sympathy with what's going on in Europe," said Ian Lyngen, senior government bond strategist at CRT in Stamford, Connecticut. "The QE program is buying further out the curve than initially anticipated."
Long-dated bonds led the US rally and the yield curve flattened as investors reached for higher yields. Treasuries are attractive as they offer significantly higher yields than comparable European debt.
Benchmark 10-year notes gained 15/32 in price to yield 1.82 percent, far higher than comparable German debt yields that fell to record lows of 0.312 percent on Friday.
Thirty-year bonds gained 1-7/32 in price to yield 2.38 percent, down from 2.47 percent late on Thursday. The yield curve between five-year notes and 30-year bonds flattened to 106.6 basis points, from 107.6 basis points late on Thursday.
Manufacturing and housing data is due later on Friday.
The next major focus for the market is the Federal Reserve's Jan. 28 policy announcement at the completion of a two-day meeting.
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