NEW YORK: Longer-dated US Treasury prices rose modestly on Thursday as fund managers added these debt maturities to match the expected month-end changes of benchmark indexes tracked by their portfolios.
Shorter-dated US Treasury yields posted fresh one-month lows on the view that the Federal Reserve would raise interest rates gradually following dovish comments from Fed Chair Janet Yellen earlier this week.
Longer-dated Treasuries gave up some earlier gains after the Chicago Purchasing Management Index came in at 53.6 in March, up from 47.6 in February and beating a forecast of 50.0 among analysts polled by Reuters.
Some investors sat on the sidelines ahead of a likely solid payrolls report from the government at 8:30 a.m. (1230 GMT) on Friday, traders said.
"Some people have some month-end index buying," said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. in New York.
Benchmark 10-year Treasury notes were up 3/32 in price to yield 1.819 percent, down 1 basis point from Wednesday.
The 30-year bond was up 11/32, yielding 2.640 percent which was 2 basis points lower from late on Wednesday.
Some selling in German Bunds due to profit-taking also kept a lid on Treasuries' gains, traders and analysts said.
Among shorter-dated maturities, the two-year yield and three-year yield touched one-month lows at 0.749 percent and 0.887 percent, according to Reuters data.
Short-term yields have fallen since Tuesday after Yellen's speech at the Economic Club of New York where she highlighted risks to the global economy and said the Fed should proceed "cautiously" on raising interest rates.
Interest rates futures implied traders now see the Fed hiking rates in the fourth quarter, instead of mid-year prior to Yellen's remarks.
"It's been all about the Fed so far this week, but we have the non-farm payrolls report tomorrow," Milstein said.
Economists polled by Reuters projected US employers likely filled 205,000 positions in March, fewer than the 242,000 in February. The jobs growth would leave the unemployment rate at an eight-year low of 4.9 percent.