Bonds rally as investors flee to safe-haven assets

Government bond markets sell off, bond rout continues German bund
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U.S. Treasury yields extended losses on Wednesday after Federal Reserve officials said they needed to see more signs of a strengthening U.S. economy before raising interest rates, according to minutes of a June Fed policy meeting at which Greece's debt crisis was cited as a serious concern.

Yields on the 10-year Treasury note were down about 5 basis points to 2.207 percent, off a session high of 2.25 percent. Meanwhile, 30-year Treasury yields were off 5 basis points to 2.996 percent.

"What you're seeing today is really just a continuation of the flight to quality," said Bob Andres, chief investment officer of Andres Capital Management, citing the ongoing debt crisis in Greece among other geopolitical issues.

"The initial response to an unfolding crisis is an increase in volatility and a 'flight to quality' as investors reduce risk. Treasury securities are the normal beneficiary of this exchange. These market moves are crisis dependent but can be very significant."

Read More'Cautious' Fed charts course for hikes: Minutes

Andres expects to see more market volatility as investors reduce risks and load up on safe-haven assets such as U.S. Treasury debt. "Contagion is a phenomenon that is here to stay [and it's] the result of the world economy growing more interdependent," Andres said.

The minutes from the June 16-17 policy-setting committee meeting show how the central bank continues to grapple with its plan to raise interest rates later this year, in the wake of mixed economic data domestically and market turmoil gathering steam abroad. The minutes underscored the view that a Fed rate hike would likely have to wait until at least September.

Separately, the Treasury Department auctioned $21 billion in 10-year notes at a high yield of 2.225 percent. The bid-to-cover ratio, an indicator of demand, was 2.72, compared with a recent average of 2.67.

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US 1-YR
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US 10-YR
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The 10-year Treasury note yield fell to 2.217 percent from 2.24 percent after the New York Stock Exchange temporarily halted floor trading of all stocks because of a technical glitch. Trading was suspended from around 11:30 a.m. ET to around 3:10 p.m.

Read MoreNYSE floor trading halted; no sign of cyberattack

"The issue we are experiencing is an internal technical issue and is not the result of a cyber breach," the NYSE said in a statement. "We chose to suspend trading on NYSE to avoid problems arising from our technical issue. NYSE-listed securities continue to trade unaffected on other market centers."

The halt came amid a selloff in U.S. stocks, with the major indexes down more than 1 percent on continued concerns about Greece and the extended selloff in the Chinese market pressured investor sentiment.

Read MoreChina's investors see savings 'fall into an abyss'

The Shanghai Composite has fallen more than 30 percent from its mid-June peak amid frequent bouts of extreme volatility, and analysts say the turbulence is starting to unnerve regional investors.

Commodities were hit on Tuesday on mounting China fears and remained under pressure in Wednesday trade.

Read MoreGreece in or out? It's a 'close call'

Meanwhile, the Greek government has until Friday morning to present detailed reform proposals to allow a bailout deal by a Sunday summit.

Greek Prime Minister Alexis Tsipras addressed the European Parliament on Wednesday promising that a detailed, "concrete" deal would be presented in the next two to three days.

—Reuters and CNBC's Jenny Cosgrave contributed to this report.