U.S. government bond prices rose Thursday as investors shifted out of stocks and into less risky investments on ongoing fears constricted credit markets would dent corporate profits.
A robust $5 billion auction of reopened 30-year bonds also broadly helped Treasurys, analysts said.
"Stocks weakness is the main theme at the front end of the Treasury curve," said Matthew Moore, economic strategist with Banc of America Securities in New York.
Two-year yields slipped to 3.44 percent, versus 3.55 percent late Wednesday. Bond yields and prices move inversely.
Moore noted that the yield curve, or gap between the yields of 2-year Treasury notes and 10-year notes, has risen above 80 basis points to its steepest level since early 2005.
Benchmark 10-year note yields were trading at 4.27 percent, having fetched a high yield of 4.353 percent at a 10-year note auction on Wednesday.
The 30-year Treasury bond pared losses after the auction but still traded down 7/32 in price for a yield of 4.66 percent, versus 4.65 percent late Wednesday.
At the auction, the bid-to-cover ratio, an indication of demand, was 2.98, well above historical averages.
The Fed Chairman kept the markets guessing, and neither reaffirmed nor dismissed investors' tentative expectations for another interest rate cut at the end of the year. The Fed has cut its benchmark rate 75 basis points since mid-September.
But as stocks fell further, rate futures signaled a 90 percent perceived chance the Fed would cut interest rates in December, up from 70 percent late Wednesday, lending more support to short dated Treasuries.
Bernanke acknowledged the growth outlook may worsen considerably after a robust third quarter, but offset those comments with a raft of warnings about the potential for inflation to take off as oil prices surge.