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NEW YORK (CNN/Money) -
Treasury prices turned higher Thursday after selling related to lower-than expected jobless claims waned and traders started to buy up bargains.
The dollar extended its losses against the euro and yen.
The benchmark 10-year note rose 16/32 of a point to 99-14/32 to yield 4.19 percent, down from 4.25 percent late Wednesday. The 30-year bond jumped a full point and 5/32 to 114-27/32 to yield 4.40 percent, down from 4.47 in the previous session. Treasury prices and yields move in opposite directions.
In shorter-dated bonds, the five-year note gained 8/32 of a point, yielding 4.03 percent, while the two-year note rose 16/32 to yield 3.94 percent. Yields on the two year note are close to reaching 4 percent, a level they haven't been in four years.
Prices eased early in the session after weekly first-time jobless claims came in below economists' expectations, suggesting strength in the labor market.
The Labor Department said early Thursday that the number of Americans filing new claims for jobless benefits rose 5,000 last week to 310,000.
The number was below the 317,000 forecast by Wall Street and well below the 340,000 reported at the same time last year.
But selling related to the lower-than expected jobless claims data stalled by early afternoon and brought out bargain-hunters on a day of relatively light trading.
"All I can see is just continued bottom fishing," Mary Ann Hurley, senior Treasuries trader at D.A. Davidson & Co in Seattle, told Reuters.
Traders said they are awaiting Friday's data on second-quarter economic growth and the monthly nonfarm payrolls report on Aug. 5 to get a better sense of the interest rate outlook.
"We're really going to have to wait to see the employment number at the beginning of the month. That's really more the basis for decisions (on interest rates) at the Fed," Don Kowalchik, a debt strategist at A.G. Edwards & Co. in St. Louis, told Reuters.
The strength of recent economic data, particularly data showing reinvigorated U.S. factory activity, have pushed yields on the two-year note higher. However, yields on the 10-year note are moving downward as buyers, notably Asian central banks, step in and help flatten the yield curve.
Economists have said that in this environment there's a chance that short-term Treasury yields could rise above long-term rates -- creating a so-called inverted yield curve.
Previous inversions of the yield curve have often preceded a recession. (For an in-depth look a this phenomenon, click here.)
In currency trading, the dollar fell, buying ¥112.15 down from ¥112.41 late Wednesday. The euro bought $1.2135, up from $1.2075.
The dollar moved back into ranges seen before the Chinese slightly revalued the yuan as traders became convinced the currency would remain stable.
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For bond charts, click here.
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