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Treasury Department auctions $29B of 7-year notes at a high yield of 1.813%

Janet Yellen
Jonathan Ernst | Reuters
Janet Yellen

U.S. government debt prices were higher on Thursday, as investors looked to a speech on inflation and policy from U.S. Federal Reserve Chair Janet Yellen, one week after the Fed surprised markets and helped stir up new fears of deflation.

The Treasury Department auctioned $29 billion in seven-year notes at a high yield of 1.813 percent. The bid-to-cover ratio, an indicator of demand, was 2.51 and above the recent average of 2.45.

Traders are particularly eyeing her comments on inflation in the 5 p.m. ET speech at the University of Massachusetts, where the audience will not be able to ask questions.

Symbol
Yield
 
Change
%Change
US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
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US 10-YR
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US 30-YR
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The Fed last Thursday held off on a rate hike, but its real surprise was the more dovish-than-expected message that came with it. It pointed to concerns about international developments—China's slowing growth—and pared back its own economic forecasts, including the one for inflation.

The yield on the benchmark 10-year Treasury note sat lower, at around 2.098 percent, after closing at 2.144 percent on Wednesday. The yield on the 30-year Treasury note was also up, at around 2.882 percent, after closing at 2.87 percent. The yield on a bond rises when its price falls.

On the data front, U.S. jobless claims came in at 267,000, below the expected 271,000, while durable goods orders for August fell 2 percent, slightly better than the expected 2.5 percent fall.

The Commerce Department said new home sales increased 5.7 percent to a seasonally adjusted annual rate of 552,000 units.

--CNBC's Patti Domm contributed to this report