* 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 (Reuters) - 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)