Long yields briefly pared losses on Thursday as the U.S. government's auction of 30-year bonds drew weak demand.
The Treasury Department auctioned $16 billion in 30-year bonds at a high yield of 3.044 percent, which was the highest since November. The bid-to-cover ratio, an indicator of demand, was 2.20. That was well bellow its recent average of 2.41.
Indirect bidders, which include major central banks, were awarded 50.8 percent, above the 49 percent average. Direct bidders, which includes domestic money managers, brought 11 percent, versus a recent average of 16 percent.
The soft auction follows solid 3-year and 10-year note sale earlier this week.
"Bottom line, as the natural buyer of a 30 year piece of paper is more from insurance companies and pension funds enabling them to better match assets and liabilities, it's a different animal than other areas of the curve in terms of gauging sentiment," said Peter Boockvar, chief market analyst at The Lindsey Group.
Benchmark 10-year Treasury note yields were lower at 2.23 percent after the sale, having closed at 2.27 percent on Wednesday following choppy trading. U.S. 30-year bond yields were down 3 basis points at 3.05 percent. The yield touched 3.08 percent moments after the announcement.
Meanwhile, the yield curve between five-year notes and 30-year bonds steepened to 154 basis points, the highest since October 29.
With the yield above 3 percent for the first time since early December "I find it unusual that demand wasn't better. Even with today's modest decline, the 30 yr yield is up 15 bps on the week," Boockvar said.
Treasury yields tumbled earlier as the dollar came under pressure following a new batch of mixed U.S. data that pushed back expectations of when interest rates in the world's largest economy will rise.