NEW YORK: US long-term Treasury debt yields on Thursday dropped from eight-month peaks in line with a pullback in German bond yields in what market participants described as a technically driven rally in prices.
A better-than-expected US jobless claims report had briefly boosted Treasury yields. Overall, some analysts believed the recent sell-off in Treasuries may have gone too far.
"We were a little oversold here," said Dan Heckman, senior fixed income strategist at US Bank Wealth Management in Kansas City, Missouri. "Rates have gone up too quickly in a very short period of time." He added that lingering worries about a Greek deal may have also prompted a flight to safety.
Greece delayed a debt payment to the International Monetary Fund due on Friday and German Chancellor Angela Merkel said talks on a cash-for-reforms deal were still far from an agreement.
The decline in German Bund yields after gains the last few days also weighed on US rates. Benchmark German Bunds were yielding 0.830 percent, from 0.878 percent on Wednesday.
Earlier in the session, bund yields rose to nearly 1.0 percent, their highest since September.
German bonds have sold off on the view that the European Central Bank may have averted the threat of deflation through its quantitative easing policy.
On Wednesday, the ECB raised its inflation forecast for 2015 to 0.3 percent from zero.
Analysts said US Treasuries will continue to track the German bond market until the Federal Reserve actually raises US interest rates.
"You tell me where Bunds are going to go and I'll tell you where Treasuries are going to go," said George Goncalves, head of US rates strategy at Nomura Securities in New York.
In late trading, US 30-year Treasuries were last up more than a point in price to yield 3.040 percent, from 3.104 percent late Wednesday.
Thirty-year bond yields earlier hit their highest since October at 3.159 percent.
US 10-year notes, meanwhile, rose 15/32 in price to yield 2.312 percent, from a yield of 2.368 percent late on Wednesday. Ten-year yields earlier on Thursday touched an eight-month peak of 2.425 percent.
A report showing US initial jobless claims falling to 276,000 last week initially boosted yields.
Traders are now bracing for the US nonfarm payrolls report for May due Friday.
A Reuters poll showed a consensus forecast of 225,000 jobs created and an unemployment rate of 5.4 percent.
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