Treasuries climbed for a second day as the U.S. auctioned $35 billion in five-year notes to stronger-than average demand amid concern harsh weather may be masking a fundamental slowdown in the economy.
The difference between yields on 10- and 30-year U.S. Treasuries narrowed to the least since 2010 after the Federal Reserve indicated interest rates may rise faster than anticipated while the pace of growth is moderate.
Treasury 10-year notes advanced for a fifth day, the longest streak of gains in almost a year, on speculation low inflation will give the Federal Reserve more flexibility in winding down its government bond-buying program.
Risk appetites in American capital markets diminished amid the U.S. budget impasse, pushing Treasury one-month bill rates to the highest since 2008 and Internet stocks to the biggest losses in two years.
Treasuries traded in the tightest range in almost a month after reports showed U.S. companies expanded hiring at a slower-than-forecast pace and a services- industry index declined more than projected, adding to speculation that economic growth is stalling.
The U.S. Treasury sold $35 billion of five-year notes at the lowest yield since November as slowing global growth and speculation the European Central Bank is considering an interest-rate cut bolstered demand.