NEW YORK: US Treasury yields fell on Thursday with the two-year yield scaling back from a near nine-year peak as some traders booked profits on bearish bond bets tied to expectations of reduced stimulus from major central banks.
A retreat in US stock prices from record highs also revived some appetite for bonds, traders and analysts said.
"We are seeing a bit of short-covering. We had a pretty strong upward move in yields in the past month. Stocks have also pulled back a bit," said Alex Manzara, vice president at R.J. O'Brien and Associates in Chicago.
Traders brushed off upbeat data that supported the notion of steady US economic growth, which would allow the Federal Reserve to possibly raise interest rates in December.
The government said first-time filings for jobless benefits fell to the lowest level since March 1973 last week, while the Philadelphia Federal Reserve's index on US Mid-Atlantic business activity unexpectedly reached a five-month high in October.
At 9:42 a.m. (1342 GMT), the two-year Treasury note yield was down over 2 basis points at 1.539 percent after reaching 1.571 percent, the highest since October 2008.
The yield spread between US 2-year government debt and its German counterpart narrowed to 226 basis points, a day after hitting its widest since February 2000 on the view that the European Central Bank is less hawkish than the Fed.
Benchmark 10-year Treasury yields were down 3 basis points at 2.305 percent, retreating from an one-week high of 2.352 percent on Wednesday.
Wall Street stocks opened lower with the S&P 500 off 0.3 percent.
At 1 p.m. (1700 GMT), the government will sell $5 billion of 30-year Treasury Inflation Protected Securities .
Analysts expected decent demand for the latest TIPS supply despite sluggish domestic inflation.
Traders also awaited news from US President Trump's meeting with current Fed Chair Janet Yellen, whose term expires in February.
Trump is expected to announce his nominee to head the US central bank in the coming days.
Yellen is one of Trump's five possible picks as Fed chief. Others include his chief economic adviser, Gary Cohn; former Fed Governor Kevin Warsh; Fed Governor Jerome Powell and Stanford University economist John Taylor.
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