TREASURIES-U.S. bond yields stay close to their historic lows

LONDON, July 19 Thu Jul 19, 2012 3:12pm IST

LONDON, July 19 (Reuters) - U.S. government bond yields kept close to historic lows on Thursday, as concerns about falling demand at a Spanish debt auction offset a slight improvement in risk appetite on the back of upbeat earnings from European companies.

* Markets expect jobless claims data later in the day to show the U.S. economic recovery is flagging, but a positive surprise is not expected to push yields much higher as the intractable euro debt crisis keeps investors on their toes.

* A Spanish auction of two- to seven-year debt saw falling demand and a significant rise in borrowing costs, reigniting worries that Madrid may need state aid in addition to the bank bailout that has already been agreed.

* The auction's results gave a boost to U.S. bonds and weighed on European equities, which hit an 11-week high earlier in the day.

* "It looks like the Spanish auction was poorly received ... so we are off the lows, but (volumes are) thin and we're trading in a 2-3 tick range," one trader said.

* U.S. 10-year yields were virtually flat on the day at 1.4956 percent, not far from the historic low of 1.442 percent set on June 1, which was matched on Monday and is the lowest level going back to the early 1800s, according to data compiled by Reuters.

* Federal Reserve Chairman Ben Bernanke was coy about future monetary policy moves in his testimony before the U.S. Congress earlier this week, disappointing those who expected a clearer signal that the central bank was eager to embark on a third round of bond purchases, or quantitative easing.