U.S. government bond prices hit session highs Thursday after a report showed new home prices in October posted their steepest drop since 1981.
The number of U.S. workers filing new claims for jobless benefits rose last week to the highest since February, indicating the labor market might be the next leg of the economy to wobble in the wake of the housing slump.
Meanwhile, soaring rates for loans between banks indicated this year's credit crunch was far from over and liquidity would remain tight as financial institutions poured over their books ahead of year-end.
The benchmark 10-year note's price rose 31/32 for a yield of 3.93 percent, compared with 4.05 percent late Wednesday. Bond yields and prices move inversely.
The 30-year long bond was up a full point, yielding 4.37 percent.
Markets shrugged off Thursday's government data showing U.S. economic growth, measured by gross domestic product, ran at its fastest rate in four years during the third quarter.
Many investors suspect the pace of expansion is waning already.
"I think the Treasury market is ignoring GDP, which is really looking in the rear view mirror. Data is suggesting a significant slowdown in the fourth quarter," said Kevin Flanagan, fixed income strategist for global wealth management with Morgan Stanley in Purchase, New York.
"So the focus is on (jobless) claims; on one of the highest readings we have seen in quite some time. For Treasuries it created a buying opportunity."
Meanwhile investors braced for more economic data, with a report on new home sales to be served up at 10 a.m.