Bond yields tumbled on Thursday after the U.S. government's auction of seven-year Treasury notes, the last batch of this week's $90 billion offering of new debt supply.
The Treasury Department auctioned $29 billion in seven-year notes at a high yield of 1.888 percent, the highest rate for that maturity this year. The bid-to-cover ratio, an indicator of demand, was 2.49 and the best since January.
Indirect bidders, which include major central banks, were awarded 53.8 percent, above the 51 percent average. Direct bidders, which includes domestic money managers, brought 12 percent, versus a recent average of 13 percent.
Short-term debt yields dropped after the announcement, with the seven-year note yield hitting a session low of 1.87 percent.
U.S. three-year note yields fell to a session low of 0.94 percent, compared to a yield of 0.99 percent in early trading. Benchmark 10-year notes were mostly flat in price to yield 2.13 percent, little changed from late Wednesday's yield.
"In trying to glean some message from the results, there wasn't much of any," said Peter Boockvar, chief market analyst at The Lindsey Group.
"[T]he yield curve now seems to be gyrating between tightening on the long end when participants think the Fed will drag their feet with the first rate hike and flattening on hints that they might not wait much longer," he said in a note Thursday.
U.S. 30-year Treasury yields rose slightly to a session high of 2.88 percent after hitting a near three-week low of 2.86 percent earlier in the session. The yields had fallen in the past two sessions, partly on institutional investors buying the bonds for portfolio readjustments ahead of the month's end.
Analysts said traders who had bought the bonds in anticipation of the institutional purchases took profit on that trade on Thursday, since the trade performed well with yields falling about 12 basis points on Tuesday and Wednesday combined. Yields move inversely to prices.
"We've seen some month-end buying all week," said Kim Rupert, managing director at Action Economics in San Francisco. "I think we're seeing a little bit of profit-taking on that move."
—Reuters contributed to this report.