By Deborah Levine, MarketWatch NEW YORK (MarketWatch) -- Treasury prices clung to small gains on Thursday, pushing yields down a day after scoring their biggest leap in months, amid timid hopes for the government's last sale of the week. Yields on 10-year notes (UST10Y 3.85, +0.17, +4.67%) , which move inversely to prices, slid 2 basis points to 3.84%. On Wednesday, the yield rose 15 basis points, or 0.15%, the biggest jump since July, a surge attributed to growing corporate debt issuance and a historical shift in swap spreads that forced traders to unwind some positions. See previous bond column. Yields on 2-year notes (UST2YR 1.09, 0.00, 0.00%) declined 4 basis points to 1.06%. On Wednesday, the yield jumped the most since June. The outlook is mixed for the government's 7-year auction (UST7YR 3.29, +0.18, +5.73%) later in the session, with some optimism that higher yields will lure buyers. "The sharp sell-off on Wednesday backed yields up to a level enticing enough to bring in solid foreign buying interest," strategists at CRT Capital wrote in a note to investors. "The moves were more consistent with reports we've heard of large position unwinds and we are left viewing the price action as transitory. Another factor in the sell-off may be concerns about the growing debt burden in the U.S. "Heightened uncertainty in the Treasury market will work against this auction as we saw in 5-year notes," said strategists at RBS Securities. "Today's 7-year auction prospects are, in a word, muddy." Treasurys pared gains slightly after the Labor Department said 442,000 American filed first-time claims for unemployment benefits, down 14,000. Read about jobless claims.

Source