Treasuries rose for a third day after German officials warned against risking higher prices while trying to spur economic growth.
A gauge of Treasury market inflation expectations fell to a 14-month low as commodity prices tumbled. Demand for longer maturities, those that benefit most from low inflation, has narrowed the difference between 10- and 30-year Treasuries to a five-year low of 70 basis points.
“I prefer 30-year bonds,” said Hajime Nagata, a bond portfolio manager in Tokyo at Diam Co., which has $129 billion in assets. “Inflation should be subdued.” Benchmark 10-year yields declined two basis points to 2.56 percent at 12:36 p.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 2.375 percent note due August 2024 rose 5/32, or $1.56 per $1,000 face amount, to 98 13/32.