U.S. long-term Treasury debt yields fell from eight-month peaks on Thursday in line with a pullback in German bond yields in what market participants described as a technically driven rally in prices.
A better-than-expected U.S. jobless claims report had briefly boosted Treasury yields. Overall, some analysts believed that the recent sell-off in Treasurys may have gone too far.
"This has been a very technically driven market," said George Goncalves, head of U.S. rates strategy at Nomura Securities in New York.
"The view is that perhaps we had an overshoot. People are realizing that the market has extended a little bit more than what it should have, being driven by this European phenomenon."
The decline in German Bund yields after gains this week also weighed on U.S. rates. Benchmark German Bunds were yielding 0.837 percent, from 0.878 percent. Earlier in the session, bund yields rose to their highest since September.
German bonds have sold off on the view that European Central Bank through its quantitative easing policy may have averted the threat of deflation. On Wednesday, the ECB raised its inflation forecast for 2015 to 0.3 percent from zero.
Analysts said U.S. Treasurys will continue to track the German bond market until the Federal Reserve actually raises interest rates.
"You may have heard this from others as well, but it's true. You tell me where Bunds are going to go and I'll tell where Treasurys are going to go," Goncalves said.
In afternoon trading, U.S. 30-year Treasurys were last up more than a point in price to yield 3.04 percent, from a yield of 3.104 percent late Wednesday. Thirty-year bond yields earlier hit their highest since October at 3.159 percent.
U.S. 10-year note yields, meanwhile, fell to 2.31 percent, from a yield of 2.368 percent late on Wednesday. Ten-year yields earlier on Thursday touched an eight-month peak of 2.425 percent.
A report showing initial claims for unemployment benefits falling to 276,000 for the week ended May 30. It was the 13th straight week that claims held below the 300,000 threshold. The data initially boosted yields.
But that positive labor report was offset by data showing U.S. non-farm productivity fell more sharply than initially thought in the first quarter, leading to a jump in labor-related production costs.
The net effect on Treasuries was muted, as a result.