U.S. Treasury prices gained on Wednesday after a Treasury Department auction of 10-year notes and the release of the Federal Reserve's Beige Book report.
Yields moved lower after the Treasury auctioned $21 billion in 10-year notes at a high yield of 2.09 percent on Wednesday afternoon. The bid-to-cover ratio, an indicator of demand, was 2.77.
Indirect bidders, which include major central banks, were awarded 71 percent, the highest since 2011. Direct bidders, which include domestic money managers, brought 11.3 percent.
The yield on 10-year notes touched a low of 2.042 percent, its lowest since October and down from 2.100 percent at the market close. (Treasury yields move inversely to prices: CNBC Explains.) The 5-year yield dropped to its lowest since late October, Reuters said, and last traded at 1.488 percent. The 2-year yield, meanwhile, hit its lowest level since December at 0.899.
U.S. Treasurys
The fall in yields also came as the three major U.S. stock averages all shed at least 1.5 percent of their value.
Treasury prices on Wednesday followed seesaw trading in oil, as crude futures were mixed after a surprise build in oil and gasoline barrels in the U.S. Brent and WTI crude oil futures traded below $31 per barrel on Wednesday, close to the psychologically important $30 mark. Initially, oil prices rose amid better-than-expected Chinese data.
In the Beige Book, the Fed said the U.S. economy continued to show mixed signals from late November to early January.
Chinese exports and imports fell by less than expected in December, leaving a trade surplus of over $60 billion for the month, according to official data.
"Weak oil prices will be a major factor behind default rates in 2016 and even if the latest rush of forecasts of oil reaching $25/20/10/bbl aren't proven right, the damage has already been done," he added.
Energy Futures
In a Wednesday speech, Boston Fed President Eric Rosengren said global and U.S. economic growth may be slipping and force the Federal Reserve into a more gradual course of rate hikes than officials currently expect.
"While monetary policy should not overreact to short-term temporary fluctuations in financial markets, policy makers should take seriously the potential downside risk to their economic forecasts and manage those risks as we think about the appropriate path," Rosengren said.
On Thursday, the Treasury will auction $13 billion in 30-year bonds and will announce the size of next week's sale of 10-year Treasury Inflation Protected Securities (TIPS.)
— Reuters contributed to this report.