By Akane Otani 

U.S. government bonds strengthened Wednesday ahead of the Thanksgiving holiday.

The yield on the benchmark 10-year U.S. Treasury note settled at 2.322%, compared with 2.361% Tuesday. Yields fall as bond prices rise.

Treasurys have mostly drifted higher in recent sessions, with the yield on the 10-year note notching its fifth decline in seven trading days Wednesday. The bond market is closed Thursday in observance of Thanksgiving and closes early on Friday.

Bond yields declined Wednesday after U.S. Commerce Department data showed orders for long-lasting factory goods declined in October from the prior month. They then fell further after minutes from the Federal Reserve's Oct. 31-Nov. 1 meeting showed officials thought inflation could stay below the central bank's 2% annual target for longer than expected.

The Fed's preferred measure of inflation, the price index for personal-consumption expenditures, has lagged behind the central bank's 2% target for much of the year, puzzling officials who have expected price pressures to pick up as other areas of the economy, including the labor market, have strengthened.

The lack of inflationary pressure has been a boon to Treasurys, which have largely traded in a narrow range in recent months after coming under selling pressure at the end of 2016.

"The fact that yields have mostly been moving sideways -- that's a testament to how large global quantitative easing continues to be," said Anujeet Sareen, a portfolio manager at Brandywine Global. Even as the Fed has begun to unwind its balance sheet, other central banks, including the European Central Bank, have continued to extend their bond-buying programs, which has helped keep bond yields in other developed markets in check, Mr. Sareen said.

One thing that could jolt the Treasurys market: passage of a tax bill in Washington. The Senate is expected to possibly vote on a tax overhaul next week. Some analysts say a tax overhaul could send bond yields higher by expanding the federal budget deficit, which would push the government to sell more bonds.

But even that scenario, Mr. Sareen said, may ultimately have a muted impact on the bond market.

"The market is still a little bit suspicious that something will get put through," he said, adding that, in his view, the current bill looks more like "moderate stimulus," not something on the scale that would send yields dramatically higher.

Write to Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

November 22, 2017 16:16 ET (21:16 GMT)