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| Old conundrum, new twist
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| Inverted or flat, the yield curve points to a weaker Federal Reserve, not a downturn. (Full story)
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NEW YORK (CNN/Money) -
Treasury prices rebounded from previous session losses Thursday, following the final installment of a $44 billion debt auction that drew strong demand from foreign investors, and a report that showed the U.S. trade deficit had widened to record levels.
The dollar rose against the euro and the yen.
The benchmark 10-year note gained 19/32 to 97-17/32 to yield 4.56 percent, down from 4.65 percent in the previous session. The 30-year bond gained 1-12/32 to 109-06/32 to yield 4.74 percent, down from 4.84 percent late Wednesday. Bond prices and yields move in opposite directions.
In shorter-dated debt, the two-year note gained three ticks, yielding 4.44 percent. The five-year note was up 10/32, yielding 4.48 percent.
The Treasury's $13 billion auction of 10-year Treasury notes, the third part of the government's quarterly debt auction, drew record interest from abroad with foreign central banks collecting more than half of the offering.
Foreign interest was relatively flat in three- and five-year notes sold earlier this week.
"This auction was spectacular," one trader at a U.S. primary dealer told Reuters. "The indirect bid was the highest ever for a 10-year note auction."
Treasury prices also got a lift following the Commerce Department's report showing that the U.S. trade deficit had swelled to a record $66.1 billion in September, beating the previous record of $60.4 billion set in February and beating expectations of $61.0 billion.
The deficit widened 11.4 percent from August, the largest monthly jump since June 2004.
But the record trade gap failed to shake investor optimism that interest rates were headed higher, and the dollar gained despite the news.
In currency trading, the dollar remained near two-year highs against the euro and the yen as the euro bought $1.1688, down from $1.1763 in the previous session. The dollar bought ¥118.20, up from ¥117.58 late Wednesday.
-- from staff and wire reports.
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Recent gains in the dollar may be fleeting -- read more here.
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