Long-term Treasurys fell for a third day Thursday after a crisis-response plan from the European Central Bank eased traders' worries about that region's debt problems.
A better-than-expected report on claims for unemployment benefits also drew money into riskier bets such as stocks.
The 10-year Treasury note fell 84 cents for every $100 invested, pushing its yield up to 1.99 percent at 3 p.m. Eastern time from 1.90 percent late Wednesday.
The price of the 30-year Treasury bond fell $2.19 per $100 invested, lifting its yield to 2.95 percent from 2.88 percent late Wednesday.
Yield is the return an investor would receive by holding a Treasury until it matures. Higher prices push yields lower by canceling out part of that return.
The ECB said early Thursday it will offer emergency loans to banks struggling with Greek debt that they own. That made traders hopeful that Greece's likely default will be managed without severe damage to financial markets.
An hour later, the Labor Department reported that 401,000 people applied for unemployment benefits last week, a smaller increase than economists had forecast. The four-week moving average, a less volatile measure, declined from a week earlier.
Demand for Treasurys has fallen this week after an eight-month rally stoked by fears about the European debt crisis and a possible global recession. The yield on the 10-year Treasury note fell Tuesday to 1.72 percent, just above the record-low 1.71 percent set last month.
Much of the demand has been driven by the Federal Reserve, which is buying $414 billion of long-term U.S. debt and selling the same amount of short-dated Treasurys. The aim is to reduce interest rates on loans such as mortgages, which tend to track the yield on the 10-year note.
Fed Chairman Ben Bernanke told Congress this week that he expects the program to lop another 0.2 percent off the 10-year yield.
The first part of the Fed's strategy appears to be working. The average rate on a 30-year fixed mortgage fell below 4 percent for the first time this week, Freddie Mac said Thursday. The housing market remains depressed because high unemployment and banks' tight lending standards prevent people from taking advantage of the low rates.
The yield on the two-year Treasury note rose to 0.27 percent from 0.26 percent. The three-month Treasury bill yielded 0.01 percent, up from zero late Wednesday. Its discount wasn't available.
The Treasury Department announced that it will auction $32 billion of three-year notes, $21 billion of 10-year notes and $13 billion of 30-year bonds next week.