The 30-year bond moved as much as a full point lower ahead of Thursday's auction, ignoring weak retail sales data that boosted bond prices further down the yield curve.
The Treasury auctions $13 billion in reopened 30-year bonds at 1pm ET.
The 30-year has been the beneficiary recently of speculation that the Fed will be a buyer of the bond if it embarks on a new easing program to extend the duration of its portfolio, a program called "Operation Twist." The yield, therefore, has been moving lower, in an inverse direction to prices.
Retail sales for August came in unchanged from July, below expectations for a 0.3 percent gain.
"It's auction-related," said RBS Treasury strategist John Briggs. "But in my opinion it's muted because of the increasing speculation that the Fed's 'Operation Twist' measures will include purchasing more long bonds."
"It's fears of supply today. Last month, it tailed 10 bps points and we were 40 basis points higher in yield," he said.
Wednesday's auction of $21 billion 10-year notes Tuesday met a lukewarm reception, and the 10-year also saw selling Wednesday.
The Fed meets for two days next week, and it's widely expected to discuss the program and possibly approve it at the meeting. The 30-year was yielding 3.34 percent as stocks opened Thursday morning, below its earlier 3.37 earlier level.
Buyers moved into the lower and middle part of the curve, driving the 2-year yield to 0.173 at one point.
Questions? Comments? Email us at firstname.lastname@example.org