Treasury yields boosted by economic bright spot

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NEW YORK (CNNMoney) -- Treasury yields rose after a better-than-expected report on orders for long-lasting goods temporarily distracted investors from looking ahead to Federal Reserve Chairman Ben Bernanke's speech in two days.

Early Wednesday, a government report showed orders for durable goods -- usually big-ticket items designed to last two years or longer -- rose 0.7% in July. Economists were expecting the figure to fall 0.5%.

The report was seen as a positive sign for the economy, since consumers and businesses typically buy durable goods only when they're feeling optimistic about their financial situation.

As a result, prices on U.S. government bonds -- which are typically seen as a safe haven in times of uncertainty -- immediately declined. Yields, which move in the opposite direction, rose.

"The consensus sentiment is that the economy is weakening, and whenever we get economic data that flies in the face of that sentiment, it translates into a sell-off for Treasuries," said David Coard, head of fixed-income sales and trading at the Williams Capital Group.

Is yield curve signaling recession?

That said, Treasury yields remain near all-time lows. The 10-year is trading at 2.26%, not far from its record-low close of 2.06% reached Aug. 18.

Wednesday afternoon, the government auctioned off $35 billion of 5-year notes at a record low yield of 1.029%. In spite of the low yield, demand was strong as investors submitted more than $95 billion in bids for the notes.

That follows another solid aucton on Tuesday, when the government sold $35 billion of 2-year notes at a record low 0.22% yield. The government will also auction $29 billion of 7-year debt on Thursday.

Investors are seeing value in Treasuries, even at such low yields, because these bonds practically guarantee at least a small return. Stocks offer no such guarantee, especially when economic data are weak and markets are volatile.

Meanwhile, an announcement two weeks ago that the Federal Reserve plans to keep interest rates near historic lows until at least mid-2013 has also kept yields down.

Economists: Fed should stay put for now

Some investors are hoping Fed Chairman Ben Bernanke will hint at further stimulus measures in a speech in Jackson Hole, Wyo., on Friday.

Last year at Jackson Hole, Bernanke prepared the market for QE2 -- a bond-buying program meant to jumpstart spending amid sluggish economic growth.