NEW YORK: US Treasuries prices fell on Wednesday along with their German counterparts as data showing an expected slight fall in euro zone manufacturing growth reduced anxiety about global growth that was briefly heightened by a dismal reading on China's economy. Euro zone business growth slowed this month, a survey showed. Markit's Composite Flash Purchasing Managers' Index came in at 53.9, down from 54.3 in August.
A Reuters poll had predicted a dip to 54.1. Medium-dated yields held above four-week lows ahead of a $35 billion sale of new five-year Treasuries at 1 p.m. (1700 GMT), part of this week's $90 billion in fixed-rate debt supply.
"The auction will probably be decent. I wouldn't expect it to hit the extremes on one side or the other," said Brian Rehling, chief fixed-income strategist at Wells Fargo Advisors in St. Louis, Missouri. The Treasury will also sell $13 billion of two-year floating-rate notes at 11:30 a.m. (1530 GMT).
Treasuries prices rose earlier on data that showed China's factory sector contracted at its fastest pace in 6-1/2 years in September before they reversed course on data on the pullback in manufacturing activity in the euro zone.
The US bond market was on track for another rocky session following two days of wild swings.
It tumbled on Monday on heavy corporate bond supply and remarks from several top Federal Reserve officials who suggested a US interest rate increase by year-end is on the table.
They rebounded sharply on Tuesday on renewed worries about the global economy and a scandal that hit German automaker Volkswagen and the rest of the European stock market.
Benchmark 10-year Treasuries were down 10/32 in price for a yield of 2.162 percent, up 3.5 basis points from Tuesday, while the 30-year bond was down 22/32 point to yield 2.968 percent, up 3.6 basis points on the day.
The German 10-year Bund yield was up 1 basis point at 0.610 percent after European Central Bank President Mario Draghi signaled it was too early to decide to expand the ECB's 1.1 trillion-euro bond-purchase program while acknowledging slower emerging market growth, a stronger euro and weaker commodity prices have put downside risks on the euro zone economy. Draghi was testifying before the European Parliament's Committee on Economic and Monetary Affairs.
Draghi's comments show "that the inflation outlook in Europe hasn't shifted enough for them to move," said Ian Lyngen, senior government bond strategist at CRT Capital Group at Stamford, Connecticut.