(Adds comment, updates prices)
* U.S. 30-year bond yields also fall, near 12-month lows
* German Bund yields down on the day, weigh on Treasury
* Focus on supply later in the session
* Month-end buying continues
By Gertrude Chavez-Dreyfuss
NEW YORK, May 28 Yields on benchmark U.S.
10-year Treasury notes dropped to their lowest in nearly 11
months on Wednesday, undermined by falls in the German bond
market following weak data and more month-end buying from
German 10-year Bund yields were down on
Wednesday at 1.337 percent. Yields fell after an unexpected
increase in German unemployment and a deceleration in the euro
zone money supply. The data reinforced expectations that the
European Central Bank will introduce further stimulus at next
The rally in Bunds spilled over to U.S. Treasuries, which
saw 10-year note yields tumble to their lowest since early July.
U.S. 30-year bond yields also fell, to near 12-month lows.
Buying by institutional investors for month-end extensions
has also boosted the market, especially as there were new U.S.
10-year note and 30-year bond issues this month.
"The month-end extensions are part of the Treasury rally and
the word is it's larger than usual," said Jeffrey Young,
interest rate strategist at Nomura Securities in New York.
According to traders, the Barclays' Treasury index is estimated
to extend out 0.125 years, which is the highest since March
One fixed-income analyst said the normal extension is
between 0.05-0.08 years.
In midday trading, prices on 30-year Treasury bonds
were up more than a point to yield 3.299 percent,
from 3.364 percent late Tuesday. U.S. 30-year yields hit a low
of 3.291 percent, the lowest since around mid-June last year.
Benchmark 10-year U.S. Treasury notes were up
21/32 in price to yield 2.443 percent, from 2.518 percent on
Tuesday. Yields touched a low of 2.439 percent, their weakest
level since early July 2013.
Earlier in the session, German unemployment data, which
posted its strongest monthly rise in over five years in May to
2.905 million jobless on a seasonally-adjusted basis. That
caused a rally in Bunds that ultimately boosted U.S. Treasuries
The German data cemented expectations of more easing
measures for the euro zone. ECB Executive Board member Yves
Mersch said as much on Wednesday. He said an ECB meeting next
week could yield a combination of policies to tackle low
inflation and low credit growth, but the timing of the
implementation could vary.
Supply is once again on the agenda on Wednesday, with the
$35 billion in five-year notes and the $13 billion in two-year
floating rate notes on the auction block.
(Editing by Andrew Hay)