Treasury prices inched higher Wednesday, supported ahead of expected purchases of debt by the Federal Reserve during the session.
Yields on ten-year notes , which move in the opposite direction of prices, declined 5 basis points to 2.85%. A basis point is 0.01%.
Yields on 2-year notes fell 1 basis point to 0.90%.
"The Fed will also provide some relief with its buyback of April 2010 to February 2011 notes," said John Spinello, Treasury strategist at Jefferies & Co.
The central bank may buy about $7.5 billion in Wednesday's buyback, according to analysts at Wrightson ICAP. That's approximately how much the Fed has bought during its previous purchases of short-term debt.
Bonds also benefited from weakness in equities as Alcoa Inc.'s worse-than-expected loss in the first quarter sparked fears of continuing losses. See more on Alcoa's results.
U.S. stocks struggled to stay positive, with the Dow Jones Industrial Average last up 0.03%.
Later on, the Treasury will sell $35 billion in 3-year notes , the second of three big auctions this week. Bids are due by 1 p.m. Eastern time.
The last two sales of 3-year notes have received unusually high demand from a group of investors that includes foreign central banks, noted analysts at Barclays Capital.
The last two sales of 3-year notes have received unusually high demand from so-called indirect bidders, a group of investors that includes foreign central banks, noted analyst at Barclays Capital.
Foreign investors continue to hold high amounts of shorter-term bills, analysts note. "We expect a spillover" to short-dated coupons, like 3-year debt, keeping indirect bidder participation high, they said. Barclays is one of the 16 primary U.S. government security dealers required to bid at Treasury auctions.
The government saw tepid demand for its $6 billion in inflation-indexed debt on Tuesday. On Wednesday, it will sell $18 billion in 10-year notes.
Also, Fed policy makers will release around 2 p.m. Eastern time the minutes of their March 18 meeting, when they decided to begin buying Treasurys.
The minutes "should clarify the Fed's thinking about the expansion of quantitative easing, to include Treasuries, after having distanced themselves from such an idea," said strategists at RBS Greenwich Capital.
