By Min Zeng Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Treasurys rose Wednesday, with the two-year note's yield touching a record low of 0.403%, as the prospects of large-scale bond buying from the Federal Reserve in coming months fueled demand. Long-dated Treasurys led the buying, extending their winning streak for a fourth straight session. The benchmark 10-year note's yield hit 2.523%, the lowest level since Sept. 1. The yield has dropped more than 20 basis points over the past four trading days. As of 8:56 a.m. EDT, the benchmark 10-year Treasury note was up 10/32 in price and its yield fell to 2.539%. The 30-year bond was 25/32 higher to yield 3.741%. The two-year note was little changed at 0.428%. Bond prices move inversely to their yields. Some market participants expected the 10-year note yield to fall to a 2.25%-2.5% range in coming months, with some even predicting the yield could drop below 2%, which will smash the record low of 2.034% set in mid-December 2008. Bonds rallied Tuesday afternoon after the Fed's latest monetary policy meeting flagged deflation risks. Policymakers said they are prepared to provide additional accommodation to support the economy, raising speculation that the central bank could announce large-scale purchases in Treasurys, known as quantitative easing, at their next policy meeting in November. "The cat is not quite out of the bag vis-a-vis extended quantitative easing, but the knot has loosened considerably," said David Ader, head of government bond strategy at CRT Capital Group LLC. The 10-year note's yield, a benchmark for consumer and corporate borrowings, dropped to as low as 2.418% hit on Aug. 25, the weakest level since January 2009. Economists at Goldman Sachs expected the Fed to buy at least $1 trillion in assets, most likely in Treasurys, in coming months. The Fed started small-scale buying in Treasurys beginning last month, using proceeds from their maturing mortgaged-backed securities. The central bank is scheduled to buy Treasurys maturing between March 15, 2013 and Aug. 31, 2014 at 10:15 a.m. EDT and the results will be released shortly after 11 a.m. EDT. In buying Treasurys, the central bank aims to push down long-term borrowing costs for U.S. households, businesses and the government. By encouraging consumer spending and corporate borrowing, the central bank hopes it can help keep in check the threat of deflation, or falling consumer prices, which has hurt the Japanese economy since the 1990s. "The Fed seems to be very concerned about a deflation trend and they are setting the framework for action going forward," said Tom di Galoma, head of U.S. rates trading at Guggenheim Partners in New York. If consumer and wholesales prices slip in the months ahead, "we will see full blown QE," he said. An extra boost from the Treasury comes from Japan. The Fed's willingness to provide more support to the economy, which is equivalent to printing more dollars, have pushed investors to weaken the U.S. currency. That has forced Japanese officials to intervene in the currency market last week for the first time in six years aiming to temper the yen's surge which hurt the nation's exports and broader economy. The dollar proceeds are typically recycled back to the Treasurys market. Wednesday, the dollar's broad weakness has pushed up the yen again, putting investors on guard for more intervention from Japan. The yen traded at Y84.62 against the dollar, strengthening from last week's trough of Y85.94.

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