US Treasury yields fell to the lowest levels since February on Thursday as falling oil and stock prices increased demand for safe-haven debt amid concerns about global growth. British and German sovereign debt yields fell to record lows, driven by concerns about Britain's referendum on European Union membership later this month and the European Central Bank's commencement of its corporate bond purchase program.
Those factors increased the attractiveness of Treasuries, which offer far higher yields than European, Japanese and other major sovereign bonds. "It's a demand for securities and yield," said Tom Tucci, head of Treasuries trading at CIBC in New York. The demand helped the US government sell $12 billion in 30-year bonds for lower yields, the final sale of $56 billion in coupon-bearing supply this week. The bonds sold at a high yield of 2.475 percent, less than 5 basis points above the record low.
"It was a very solid auction," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. "It doesn't show any investor hesitation at lower yields, which is really a factor of falling global interest rates." Thirty-year bonds ended up 23/32 in price to yield 2.48 percent, the lowest level since February 11. Benchmark 10-year notes gained 8/32 in price to yield 1.68 percent, the lowest since February 24. German 10-year bund yields, by comparison, dropped to a record low 0.023 percent on Thursday.
The US yield curve between two-year and 10-year notes flattened, which is sometimes viewed as an indicator of weakening growth. The curve flattened to 89 basis points, its lowest since 2008. Investors this week have shown a preference for longer-dated bonds, after indirect bidders reduced participation in a $24 billion sale of three-year notes on Tuesday.
The Treasury sold $20 billion in 10-year notes to record demand from investment funds, foreign central banks and other indirect bidders on Wednesday. Traders have pushed back rate-hike expectations to September at the earliest, after last week's jobs report for May showed that employers added only 38,000 positions in the month, the smallest gain since September 2010.