U.S. Treasury yields fell to the lowest in three months on Wednesday, after weaker-than-expected jobs data on Tuesday reinforced expectations that the Federal Reserve is unlikely to reduce the size of its bond purchase program in the near term.
Buying overnight helped yields fall further, after a rally on Tuesday and no major data releases scheduled on Wednesday. The government is catching up on delayed economic data after the government's 16-day partial shutdown ended a week ago. Market focus is now largely centered on next week's Federal Reserve policy meeting, where the U.S. central bank is expected to keep its $85 billion a month bond purchase program unchanged.
"The Fed is kind of handcuffed from doing any tapering, the consensus is pushing it out to March. The weak (jobs) number supports it,'' said Sean Murphy, a Treasurys trader at Societe Generale in New York.
Benchmark 10-year notes were last up 7/32 in price to yield 2.48 percent, the lowest since July 23 and down from 2.60 before the jobs data was released on Tuesday. The yields have fallen from 3.00 percent on Sept. 5, before the Fed surprised investors by keeping the size of its bond purchase program unchanged.
The Fed bought $3.15 billion in notes due 2021 to 2023 on Wednesday as part of its ongoing purchase program.