U.S. Treasurys prices gained on Thursday in choppy trading after the European Central Bank cut interest rates to record lows and announced new measures meant to help stimulate the region's economy.
The ECB said it was setting a negative deposit rate, effectively charging banks to deposit overnight. The move, without precedent in ECB history, came in response to a slowdown in inflation, to far below the central bank's target, amid weak euro zone lending.
The ECB said it will offer banks a targeted long-term refinancing operation (LTRO) to stimulate lending. The bank also said it was preparing to purchase asset-backed securities and will discontinue sterilizing previous bond purchases.
Treasurys yields had fallen before the ECB announcement on strong overnight demand for U.S. bonds from Japanese investors, said traders. They then weakened temporarily after the announcement, in line with German government bonds, before then paring losses to trade little changed.
"A lot of the details from the ECB's announcement still have to be hashed out," said Aaron Kohli, an interest rate strategist at BNP Paribas in New York. "There's a negative deposit rate that everyone is focused on, but also ABS purchases. It's not clear what the details are."
Benchmark 10-year notes were last up 8/32 in price to yield 2.58 percent.
Bonds gained some support from investors that saw the ECB's actions as further evidence that central banks will continue to keep monetary conditions loose.