NEW YORK: The US Treasury debt market rallied on Thursday as investors sought higher-yielding dollar assets after the Bank of Japan said it would step up asset purchases to boost its economy, sending Japanese bond yields to record lows.
A surprise jump in domestic jobless claims undermined recent optimism about an improving labor market and fueled bets the Federal Reserve would cling to its own large-scale asset purchase program this year to cut unemployment, analysts said.
The latest weekly jobless claims, which climbed to its highest since November, spurred concerns about the economic outlook in the second quarter and helped drive a safe-haven bid for Treasuries.
"Every year now for three years, we have tended to see Treasury yields rise in the early part of the year and then the economic data seem to slow down as we get into the spring and summer months," said Jim Kochan, chief fixed-income strategist, Wells Fargo Funds Management LLC, Menomonee Falls, Wisconsin.
These factors, together with lingering worries about the euro zone debt crisis, propelled a wave of bond buying that sent the yield on the 30-year Treasury bond below 3 percent for the first time since mid-January.
The benchmark 10-year Treasury note last traded up 14/32 in price at 102-2/32, yielding 1.766 percent, down 5.0 basis points from late on Wednesday. The 10-year yield encountered chart resistance in the 1.75 percent area, near its 200-day moving average.
The 10-year US Treasury note underperformed the 10-year Japanese government debt whose yield fell to a record low of 0.425 percent in reaction to the Bank of Japan's scheme to buy 7 trillion yen ($73 billion) in assets a month.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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