Yields inch lower as Ukraine-Russia tension weighs


U.S. Treasury long bond yields fell for a third straight session on Thursday, as renewed tensions between Ukraine and Russia wiped out earlier gains posted after the release of positive economic numbers.

Yields on benchmark 10-year Treasuries slipped as well, down for a second consecutive day, as markets failed to nudge them above their 200-day moving average of 2.7271 percent, prompting short-covering.

The conflict between Russia and Ukraine added a tone of uncertainty to the market, nullifying some of the goodwill brought on by strong U.S. durable goods data and robust earnings overnight from Apple.

The benchmark 10-year U.S. Treasury note was last up 6/32 in price to yield 2.68 percent. Prices on 30-year Treasury bonds were 18/32 higher to yield 3.45 percent.

Yields pared earlier gains, dropping for a third straight session, after the release of better-than-expected U.S. manufacturing and jobs data.

Orders for long-lasting U.S. manufactured goods, or durables, rose more than expected in March, while a separate report showed U.S. continuing jobless claims were the lowest since December 2007.

Both economic numbers spurred a move away from safe-haven Treasurys.

"The durable goods number is just supporting the idea of a decent bounce-back after a poor winter and that we are gradually pulling ourselves out," said David Keeble, global head of interest rate strategy at Credit Agricole in New York.

Read More Russia starts military drills near Ukraine: Reports

"We're now just waiting for the inflation and wage numbers to pick up to undertake a bigger sell-off."

An unusually cold and snowy winter disrupted economic activity at the end of 2013 and the beginning of this year, holding back job growth and weighing on industrial production.

Treasury prices were lower before the latest U.S. economic data, thanks to results of Apple that surpassed expectations. Apple reported sales of 43.7 million iPhones in the quarter ended March, far outpacing forecasts. That drove a 4.6 percent rise in revenue to $45.6 billion, a record for any non-holiday quarter.

"The Apple results sent Nasdaq into the stratosphere, putting Treasurys on a defensive stance," said Keeble.

Treasurys, however, could get back in favor given tensions continued tensions between Russia and Ukraine.

Russia started military drills near the Ukrainian border with on Thursday in response to operations by Ukrainian forces against pro-Russian separatists and NATO exercises in eastern Europe, Defense Minister Sergei Shoigu was quoted as saying by the Interfax news agency.

—By Reuters with CNBC