Treasury prices whipsaw after ECB announcement

U.S. government debt yields fell in volatile trading on Thursday after the European Central Bank unveiled a more aggressive than expected bond-buying program.

The central bank kept its main refinancing rate at 0.05 percent, with the rate on its marginal lending facility at 0.30 percent. The rate on its deposit facility was held at -0.20 percent. Read More ECB holds rates; markets on edge on Europe QE hopes The U.S. 10-year benchmark Treasury note (U.S.:US10Y) yield climbed to a session high of 1.95 percent after the ECB announcement, before turning lower. The 10-year note was last down 4/32 in price, with the yield at 1.89 percent.

Thirty-year bonds (U.S.:US30Y) were last down 4/32 in price with the yield at 2.47 percent, having hit record lows of 2.35 percent last week. "It's pretty aggressive, slightly more than the market was looking for,'' said Wilmer Stith, a fixed income portfolio manager at Wilmington Trust in Baltimore. The bond purchases will further reduce the supply of high-quality debt, which has supported long-dated Treasurys as investors reach for higher yields. That is likely to continue to support bonds even as investors also anticipate improving growth and inflation that should eventually push yields higher.Read More ECB needs to buy more bonds than Fed: CIO "It's bullish for Treasuries,'' said Kim Rupert, managing director of Action Economics in San Francisco. "We've seen record low yields in the periphery in Europe, and that will provide an underpinning for Treasuries for widening spreads.'' The World Economic Forum is well under way, with heads of state and government as well as global business leaders mingling in the Swiss mountain resort of Davos. Chinese Prime Minister Li Keqiang addressed delegates Thursday afternoon on the state of the Chinese economy.

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Reuters contributed to this report.