NEW YORK: US Treasuries prices edged up on Friday and benchmark yields hovered at their lowest levels in over three weeks as global stock market losses stoked demand for lower-risk government debt.
Bond prices initially rose on a steep sell-off in Chinese equities after Reuters reported Chinese stock regulators widened their probe of brokerages to include the country's fourth-largest securities firm. The Shanghai Composite Index dropped 5.5 percent for its largest single-day loss since late August, while the MSCI world stock index fell 0.4 percent.
"There was a bit of safe-haven buying overnight," said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott in Philadelphia.
Treasuries clung to gains as US blue-chip shares slipped on worries about weak consumer spending. Early evidence suggested American shoppers were not rushing out to stores on Black Friday, the unofficial start of the critical year-end period for many US retailers.
Trading volume was light, with US financial markets closing early after being shut on Thursday for the Thanksgiving holiday.
The US bond market closed at 2 p.m. (1900 GMT), an hour after Wall Street stopped trading.
Wall Street's major indexes ended mixed, with the S&P and Nasdaq reversing losses to eke out gains.
The Standard & Poor's 500 index rose 0.06 percent. Benchmark 10-year Treasuries notes were up 3/32 in price for a yield of 2.222 percent, down 1 basis point from late on Wednesday.
Earlier, the 10-year yield touched 2.204 percent, the lowest level in more than three weeks, according to Reuters data.
The decline in US yields came as German five-year yields hit a record low of -0.206 percent as traders anticipate possible policy easing from the European Central Bank when it meets next week.
"There was interest in Treasuries with the melting in yields in Europe," said Jim Vogel, interest rates strategist at FTN Financial in Memphis, Tennessee.
The bond market's gains were limited on caution ahead of next week's wave of top-tier US data, including the November payrolls report, analysts said.
Evidence of further improvement in the US labor market would reinforce expectations the Federal Reserve will raise interest rates at its last policy meeting of the year, on Dec. 15-16.
The futures market implied traders see a 78 percent chance of a December rate hike, unchanged from Wednesday, according to CME Group's FedWatch program.
<Center><b><i>Copyright Reuters, 2010</b></i><br></center>