Treasuries close higher after Bernanke press conference

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NEW YORK (CNNMoney) -- Treasury prices closed higher Wednesday as investors reacted to the Federal Reserve's interest rate statement and continued to stress over the Greek debt crisis.

Most observers expected the Fed would keep rates steady, and the central bank did just that.

The Fed also said it remains on track to end its stimulus program, known as QE2, at the end of the month, and that "the Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate."

But some investors were waiting for the big event: Ben Bernanke's press conference scheduled for 2:15 p.m. ET. Traders were, as usual, hanging on the Fed chief's every word.

Reporters peppered Bernanke with questions on the end of QE2, the possibility of QE3 and the potential for a double dip recession.

Bernanke said he believes the recent slowdown is due to temporary factors such as supply disruptions from the earthquake in Japan. But he acknowledged that more long-term problems may be behind the economic weakness this year.

Treasuries erased gains made earlier in the day during and after Bernanke's press conference, with the benchmark 10-year yield creeping toward the 3.00% mark.

While another full fledged round of quantitative easing might be a politically difficult proposition at the moment, Kenneth Naehu, managing director and head of fixed income at Bel Air Investment Advisors, said investors are expecting some sort of simulative move by the Fed.

"The market is clearly hoping that Bernanke indicates more support for the marketplace," Naehu said.

Meanwhile, the benchmark 10-year yield closed at 2.99%. Treasury prices continue to be supported by safe-haven bids for U.S. debt as a result of eurozone instability.

Bernanke: Stop holding debt ceiling hostage

On Tuesday, the Greek government survived a closely watched confidence vote.

Greek lawmakers voted to support Greek Prime Minister George Papandreou's government after the market close. The win boosted the likelihood that the country will be able to secure a bailout package and avert a default.

Naehu said investors will be keeping a close watch on Greece, primarily due to fears the crisis will spread to more stable eurozone countries.

What yields are doing: The 30-year yield was little changed at 4.22%, the 2-year yield increased to 0.38% and the 5-year yield decreased to 1.54%.