Yields on US 30-year bonds specifically were higher ahead of a $12 billion auction later in the session. Traders tend to sell the bond to bump up the yield, which moves inversely to the price, so can they buy it at a lower price at the auction in a practice known as "concession."

"It has been a continued grind lower in prices, part of it is Europe, and definitely there are some people setting up for the $12 billion 30-year bond auction," said Justin Lederer, Treasury analyst at Cantor Fitzgerald in New York.

Germany's benchmark 10-year bond yield was back above 0.50 percent on Thursday after a report that the European Central Bank was likely to signal in September that its will gradually unwind its asset purchase program next year.

US Treasury prices rose on Wednesday on what bond investors saw as a dovish congressional testimony by Federal Reserve Chair Janet Yellen, who said the US central bank does not have to tighten "all that much" because interest rates are closer to the neutral federal funds rate.

Yellen repeated the testimony before the US Senate on Thursday and investors were looking to see if the Fed chief would try to come across as more hawkish in a question and answer portion given the market's reaction on Wednesday.

US data on Thursday were steady overall, with jobless claims dropping to a seasonally-adjusted 247,000 for the week ended July 8. Claims have now been below 300,000 for 123 straight weeks.

US producer prices rose 0.1 percent in June, with core prices also rising. On an annual basis, however, gains in the PPI slowed to a 2.0 percent pace, from 2.4 percent the month before, adding to the narrative of low inflation.

Yields rose slightly on the economic data.

For Thursday afternoon's 30-year bond auction, Aaron Kohli, director of fixed income strategy at BMO Capital Markets, expects the yield to be slightly high, given the bond has not sold off all that much and the curve has flattened.

A flatter yield curve suggests that investors have been buying the long bond because inflation has been low.

In mid-morning trading, the 10-year Treasury yield was at 2.333 percent, up from 2.327 percent late on Wednesday.

Before the auction, US 30-year bond yields rose to 2.901 percent, from 2.894 percent on Wednesday.