NEW YORK: US Treasury debt prices rose on Wednesday in thin volume, as a fall in oil prices and on the stock market prompted investors to seek safe-haven government bonds.
Benchmark 10-year yields, which move inversely to prices, fell to session lows below 2.2 percent, well off the day's peaks. U.S. 30-year bond yields were slightly higher on the day, but remained below a key 3.0 percent level.
Yields were also lower on the front end of the curve, even though investors have priced in a Federal Reserve interest rate hike next week.
Oil prices, which have influenced the Treasury market this week in the absence of major U.S. economic data, fell again as investors remained worried about a supply glut. Weakness in oil has also driven selling in stocks, spurring a bid in safe-haven U.S. Treasuries.
"The stock market weakness and the fall in the price of oil have provided a bid in the bond market," said Lou Brien, market strategist, at DRW Trading in Chicago.
Results of Wednesday's auction of U.S. 10-year notes were mixed overall. The yield of 2.233 percent was a little higher than expected.
Bids totaled $55.5 billion for a 2.64 cover, up from last month's 2.58, and a little better than the 2.66 average. Indirect bidders, referring to foreign central banks, took in 62.0 percent, higher than the previous auction.
"While the auction finished with good non-dealer sponsorship, the rally into the auction led to a tail," said Aaron Kohli, interest rate strategist, at BMO Capital Markets in New York.
"Overall stats were fairly average with the dealer takedown a bit lower and indirects mainly responsible for the strength," he added.
In late trading, U.S. benchmark 10-year Treasury notes rose 6/32 in price to yield 2.214 percent, down from Tuesday's 2.222 percent.
The 30-year bond was up 3/32 in price to yield 2.969 percent, slightly up from 2.957 percent on Tuesday.
U.S. two-year Treasury notes meanwhile, were up 1/32 in price, with a yield of 0.923 percent, down from Tuesday's 0.943 percent. Last Thursday, two-year yields hit 0.994 percent, their highest since May 2010.
Volume has been generally sparse, and December tends to be a relatively thin volume month.
"The point really is that there's not a lot going on from the overnight crowd," said CRT Capital in a research note.
"And we really don't expect too much. The presumption is that we're all on wait for the Fed and have that as pretty much a foregone conclusion."
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