NEW YORK: US Treasury debt yields fell across the board on Thursday, undermined by worries about OPEC failing to agree on oil output, concerns over Britain's future in the EU, and overall uncertainty ahead of Friday's US non-farm payrolls report.
Yields, which move inversely to prices, slid to two-week lows on 10-year notes and 30-year bonds.
Thursday's OPEC meeting ended with no new policy or ceiling amid resistance from Iran, although Saudi Arabia vowed not to flood the market with oil.
U.S crude futures initially fell on the news, but rallied after the release on data showing a weekly drawdown in US crude stockpiles.
"Treasuries were driven by what's going on in oil and OPEC and also what's going to happen to tomorrow's payrolls," said Subadra Rajappa, head of US rates strategy, at Societe Generale in New York. "The market is expecting a number that is a little below consensus for payrolls tomorrow, and still resisting pricing in a June or July rate hike. It's still a coin toss."
Fed funds futures, based on the CME Group's FedWatch, had priced in on Thursday a 17 percent chance of a June hike, from 23 percent late on Wednesday. A July rate increase had a 60 percent chance on Thursday, from 59 percent the day before.
Yields drifted higher, however, after the release of the US private sector employment report and initial weekly jobless claims, which were both in line with expectations. US private employers hired 173,000 workers in May, while jobless claims fell last week to 267,000, suggesting a steadily improving labor market in the world's largest economy.
"The general path of modest growth and gradually picking up inflation has pushed yields a little higher," said David Keeble, global head of interest rates strategy at Credit Agricole in New York.
Worries that Britain might leave the EU added to the safety bid for Treasuries as the June 23 referendum approaches. While Wednesday's YouGov poll showed British voters evenly split between "remain" and "leave," two previous surveys showed a move toward exiting.
In late trading, 10-year Treasury notes were up 13/32 for a yield of 1.800 percent, from 1.840 percent on Wednesday. Earlier, 10-year yields fell to 1.797 percent, the weakest level since May 18.
US 30-year bonds rose 31/32, yielding 2.578 percent, from 2.616 percent on Wednesday. Yields earlier touched a two-week low of 2.571 percent.
Two-year notes were flat in price, with a yield of 0.890 percent, compared with Wednesday's 0.915 percent.