* U.S. 30-year yield falls to lowest since July
* Domestic producer prices post biggest rise in 10 months
* Short-, medium-dated debt set for best week since Sept
* Fed to buy $2.0-$2.5 billion notes due in 2021-2024
By Richard Leong
NEW YORK, April 11 U.S. Treasuries prices rose
on Friday as nervous investors pulled out of stock markets
worldwide and piled into less risky government debt, sending the
U.S. 30-year bond yield to its lowest level since July.
The sell-off in global equities persisted in the wake of
disappointing quarterly results from JPMorgan Chase & Co.
, the biggest U.S. bank. This exerted more pressure on
the Standard & Poor's 500 index that just suffered its
biggest one-day drop in two months.
"This equity market meltdown has brought a 'fear' bid into
bonds," said Larry Milstein, head of government and agency
trading at R.W. Pressprich & Co. in New York.
Benchmark 10-year Treasuries notes last traded
4/32 higher in price for a yield of 2.614 percent, down 1 basis
points from late on Thursday.
The 30-year bond was up 14/32 in price, yielding
3.479 percent, down 2 basis points from Thursday. The 30-year
yield fell to its lowest intraday level since early July,
bringing its year-to-date decline to 46 basis points, according
to Reuters data.
Short-to-medium Treasuries firmed modestly in price with
their yields flat to down about 1 basis point.
The U.S. bond market rallied this week on renewed safe-haven
bids as well as relief buying in reaction to the minutes of the
Federal Reserve's March 18-19 policy meeting.
The minutes suggested most policy-makers wanted to cling to
a near-zero rate policy they adopted in December 2008 until the
U.S. economy creates more jobs and an inflation rate that
achieves its 2 percent target, investors said.
Prior to the release of the minutes on Wednesday, some
traders had worried the U.S. central bank might raise rates
earlier and at a faster pace than they had thought after the Fed
released its summary of economic projections.
Compounding this perceived hawkish view on rates were
remarks by Fed Chair Janet Yellen at a press conference after
the March policy meeting, when she said the Fed might increase
rates a "considerable time" after it completed its bond-purchase
program, a period she defined as "around six months."
The FOMC minutes, together with news of a mildly
below-forecast 192,000 payroll increase in March a week ago,
have sparked a rally in short- and medium-dated Treasuries,
putting them on track for their best week since September.
"There could more room for bonds to rally if equities
continue this washout," Milstein said.
Friday's stronger-than-expected data on domestic producer
prices capped the bond market's gains, challenging a view that
domestic inflation will remain tame for a long time.
The Labor Department said its index of producer prices rose
0.5 percent last month for its biggest rise since June. Analysts
polled by Reuters had forecast a 0.1 percent increase.
The index's core reading, which excludes volatile food and
energy prices, posted a 0.6 percent increase in March for its
biggest monthly gain in three years.
Meanwhile, the Fed was scheduled to buy $2.0 billion to $2.5
billion in government debt due in 2021 to 2024 at 11 a.m. (1500
GMT), which is part of its planned $30 billion purchases of
Treasuries in April for its third round of quantitative easing.
(Reporting by Richard Leong; Editing by James Dalgleish)