Treasurys rise on unrest, demand strong at auction



Treasurys rose on Thursday as tensions between Ukraine and Russia spurred safety buying, helping to stoke strong demand at a seven-year note auction.

The Treasury Department auctioned $29 billion in seven-year notes at a high yield of 2.105 percent. The bid-to-cover ratio, an indicator of demand, was 2.72.

"There seems to be a lot of demand shown in the auctions all week and in particular today,'' said Lou Brien, a market strategist at DRW Trading in New York.

"That might indicate some international demand from Japan or China, but there has also been a bid because of international news on Ukraine and Venezuela, as investors look to park money,'' said Brien.

(Read more: Russian jets patrol Ukraine border, markets pull back)

Tensions over Ukraine grew overnight, with Russia's Defense Ministry quoted as saying fighter jets along its western borders have been put on alert, a day after it called a snap military exercise of 150,000 troops.

Other data showed an unexpected increase in the number of Americans filing new applications for unemployment benefits last week, which also boosted Treasury prices.

"The data has been weak, and although that has not bothered the stock market at all, the Treasury market has noticed and that has been part of the bid,'' said Brien.

Remarks by Federal Reserve Chair Janet Yellen during her testimony before the Senate Banking Committee provided little clarity on the impact of a harsh winter on recent economic weakness and did not stir prices.

(Read more: One thing Yellen could say that may worry markets)

Ten-year notes were up 4/32 in price, sending yields down to 2.650 percent. Thirty-year bonds were up 11/32 in price, pushing yields down to 3.606 percent from Wednesday's close of 3.635 percent.

The Fed bought $3.79 billion in Treasuries maturing in 2018. It will buy $1 billion to $1.25 billion in Treasurys maturing between 2036 and 2044 on Friday, as part of its ongoing bond-buying program.

Investors await GDP data on Friday for further indications of the strength of the U.S. economy.

—By Reuters