U.S. Treasury long bond prices edged higher on Friday in line with gains in euro zone debt after European Central Bank President Mario Draghi said the central bank is prepared to do more to stimulate a sluggish euro zone economy.
U.S. government debt took a cue from European markets, where Draghi's comments lifted euro zone debt and pushed yields on three of the region's countries - Ireland, Italy, and Austria - to record lows.
Treasurys rose despite gains in U.S. stocks, which typically draw investors away from debt. Stocks rose as Draghi's comments and a surprise rate cut from China cheered investors worried about a slowdown in global growth.
Draghi said there was now no sign of economic improvement in the months ahead and the ECB would expand and step up its program to pump more money into the currency bloc if its current measures fell short of lifting inflation..
"The Draghi comments helped Treasurys higher, but the U.S. started waking up and saw some selling, but we're sort of recovering again," said David Keeble, global head of interest rates strategy at Credit Agricole in New York.
Meanwhile, China's rate cut, the first in over two years, came as factory growth has stalled and the property market, long a pillar of growth, has remained weak.
In mid-morning trading, benchmark 10-year U.S. Treasury notes were up 6/32 in price to yield 2.32 percent from 2.34 percent late Thursday. Five-year notes were flat, yielding 1.62 percent.
Keeble said the common theme right now is still to buy Treasurys at certain levels.
"Clients will set targets where they will buy Treasurys again when the yield hits 2.40 percent," said Keeble. "If it gets to 2.45, then they will buy again."
U.S. 30-year Treasury bonds were up 19/32 in price, with a yield of 3.03 percent, from 3.05 percent at the close on Thursday.
"In the technical sense, the sideways to slightly firmer price action is a constructive thing for the market because, in contrast to Wednesday's in-range weakness, Thursday's action shifted the momentum measures back into bullish territory," said CRT Capital in a research note.