By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices rose slightly on Thursday, pushing yields down, as traders anticipated good demand for the government's last auction of the week.
U.S. debt prices recovered from a slight decline in European trading hours after the Labor Department said jobless claims unexpectedly rose in the latest week.
Yields on 10-year notes (UST10Y 2.71, +0.02, +0.56%) , which move inversely to prices, slipped 1 basis point to 2.73%. A basis point is 0.01%.
On Wednesday, yields on the benchmark security fell to the lowest level since April last year as investors around the globe interpreted the Federal Reserve's plan to recycle holdings into Treasurys as a sign of much deeper economic problems. Read about Wednesday's bond market.
Two-year yields (UST2YR 0.52, 0.00, 0.00%) were little changed at 0.51%, after touching a new all-time low on Wednesday.
Yields on the current 30-year bond (UST30Y 3.92, -0.01, -0.18%) traded at 3.92%.
The Treasury Department will accept bids on new 30-year bonds until 1 p.m. Eastern time.
The government received decent demand at sales of 3-year (UST3YR 0.78, -.00, -0.38%) and 10-year notes already this week despite some of the lowest yields seen in months.
"The 30-year [-note] sale will be a real test for the market," said strategists at Nomura Securities. "After the fierce rallies seen in the last few days, it will be important to see whether investors decide to buy at these levels."
With short-term yields so low, "further stock declines and flight-to-quality flows may elicit a stronger bid out the curve, especially if the fall of 2010 proves to be the 'fall' of risk markets," they wrote in a note.
A report from the Labor Department showed that first-time claims for regular state unemployment insurance benefits reached the highest level since February, up 2,000 to 484,000.
A separate report showed import prices rose 0.2% in July. Read about jobless claims.
