(Adds comment, adds auction results, updates prices)
* U.S. 30-year bond yields also fall, near 12-month lows
* German Bund yields down on the day, weigh on Treasury
* 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 into 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 2011. One fixed-income analyst said the normal extension
is between 0.05-0.08 years.
In late trading, prices on 30-year Treasury bonds
were up more than a point to yield 3.290 percent,
from 3.364 percent late Tuesday. U.S. 30-year yields hit a low
of 3.286 percent, the lowest since around mid-June last year.
Benchmark 10-year U.S. Treasury notes were up
22/32 in price to yield 2.439 percent, from 2.518 percent on
Tuesday. Yields touched a low of 2.434 percent, their weakest
level since early July 2013.
Earlier in the session, German unemployment data showed 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 Treasuries
"There's still some global weakness that foreign investors
are concerned about and that's why we're seeing foreign interest
in our bond market," said Dan Heckman, senior fixed income
strategist at U.S. Bank Wealth Management in Kansas City. "The
longer this persists, the more concerned we should be."
Meanwhile, Treasury's 5-year auction was fairly decent,
especially given Wednesday's rally in the market and also the
fact that it competed directly with the $13 bln 2-year floating
The note's high yield came slightly above the bids just
before the deadline, stopping at 1.513 percent. There were more
than $95.6 bln in bids for a 2.73 cover, a bit below last
month's 2.79, but a little above the 2.65 average. Indirect
bidders, which includes foreign central banks, accepted 50.4
percent, better than April's 44.9 percent.
(Editing by Chizu Nomiyama)