The China news hurt stocks globally, while European markets also worried about the fiscal health of Greece, whose borrowing costs hit their highest since the country adopted the euro. Though the United States has its own budget problems, US Treasuries have managed to maintain their safe-haven status among investors for now, allowing them to benefit from the news on Greece.
"Bonds are rising mostly because of equities being down as much as they are. There is a little bit of flight from risk," said Rick Klingman, managing director of Treasury tradinng at BNP Paribas in New York. "Greece and some of the peripheral European markets are getting slammed. That kind of scary move in other markets is just bringing a little bit of money into our market."
The benchmark 10-year note was last up 10/32 in price, yielding 3.66 percent versus Tuesday's close of 3.70 percent. Yields fell as far as 3.6358 percent, their lowest since December 21. The 30-year long bond rose nearly a point in price and yields also struck a one-month low. It was last up 27/32, yielding 4.54 percent versus Tuesday's close of 4.59 percent. Long bond yields fell as far 4.53 percent, their lowest since December 21.
The day's economic data was mixed but did little to upset the bond-friendly environment. US home starts unexpectedly fell last month as unusually cold weather hampered construction, but a jump in building permits to a 14-month high indicated the housing market recovery was intact. Producer prices rose for the third consecutive month but were generally tame, which was consistent with last week's report on consumer prices.