Investors loaded up on Treasurys Thursday as rising tensions in the Middle East kept oil prices high.
The price of the 10-year Treasury note rose 28.1 cents per $100 invested. Its yield, which moves in the opposite direction, fell to 3.46 percent from 3.49 percent late Wednesday.
Traders shifted money out of stocks and into more stable assets as the conflict between Libyan protesters and forces loyal to Moammer Gadhafi intensified. The eastern part of the country is now largely controlled by anti-government forces.
"It's disconcerting to see governments toppled or get strongly challenged every two weeks," said Jim Vogel, a debt analyst at FTN Financial.
Investors also watched oil prices cross $100 a barrel earlier Thursday before backing down to settle above $97 after news that oil production in Libya hadn't been cut as much as feared. Higher oil prices are causing concerns that the economic recovery could be stifled. Libya is the world's 15th largest exporter of crude, accounting for 2 percent of global daily output.
The Treasury Department wrapped up its auctions this week with a $29 billion sale of seven-year notes. Demand was better than the previous two auctions, Vogel said. The $35 billion sale in three-year notes Tuesday and the $35 billion sale of $35 billion in five-year notes Wednesday were both weaker than expected.
In other trading, the price of the 30-year Treasury bond rose 65.6 cents per $100 invested, while its yield fell to 4.55 percent from 4.59 percent late Wednesday. The yield on the two-year note slipped to 0.74 percent from 0.76 percent.
In the market for short-term Treasury bills, the three-month T-bill paid a 0.12 percent yield. Its discount was 0.13 percent.