By Joseph Adinolfi, MarketWatch

10-year bund yield falls to all-time low

NEW YORK (MarketWatch)--Treasury yields rose Thursday after gauges of inflation and business investment in the U.S. came in stronger than expected.

The yield on the 10-year note was up 2.1 basis point to 1.988% in recent trade. Earlier in the trading session, it had fallen as low as 1.932%, its lowest intraday level in two weeks, according to Tradeweb data.The two-year yield was up 2.8 basis points to 0.638%.

U.S. durable-goods orders climbed a seasonally adjusted 2.8% in January, beating the 0.5% growth consensus forecasts from a MarketWatch poll of economists and suggesting that manufacturers are preparing to increase production. The headline consumer-price index contracted by 0.7% in January, its third decline in a row, in line with the consensus forecast of economists polled by MarketWatch.

But core CPI, which strips out volatile energy and food prices, rose 0.2%, beating a consensus forecast for 0.1% growth.

Frenzied buying in Europe spilled over into the Treasury market, lifting yields earlier in the session, according to David Keeble, head of interest-rate strategy at Crédit Agricole.

In Europe, frenzied buying ahead of the European Central Bank's first purchases of sovereign debt drove the German 10-year bund yield to an all-time low of 0.285%, down 4.1 basis points on the day.

Italian 10-year yields and the Spanish 10-year were down 12 basis points to 1.338% and 1.262%. The Portuguese 10-year yield was down 14 basis points to 1.880%.

Tom di Galoma, head of rates and credit trading at ED & F Man Capital Markets, said bond investors were loading up on eurozone debt hoping that demand from the ECB will allow them to sell quickly, and at a premium.

"European rates are not going up, and the ECB hasn't even started buying yet," said Tom di Galoma, head of rates and credit trading at ED & F Man Capital Markets. "People are just loading the boat, hoping they'll get taken out at higher levels."

The ECB is expected to begin its first 60-billion euro purchase of public- and private-debt after its March 6 meeting.

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