Treasurys tick higher as stocks tumble

Treasury prices ticked higher Wednesday, as a sharp pullback in the stock market gave investors reason to halt this week's bond sell-off.

With crude prices rebounding Wednesday to settle up $5.07 at $136.38 a barrel, the Dow Jones industrial average fell more than 200 points Wednesday, luring many market participants to safer government securities.

Analysts said the Treasury market also found some support after reports of comments from European Central Bank official Juergen Stark that indicated that if the ECB does raise interest rates, it would likely be a one-time move. Rising rates globally can erode the value of U.S. fixed-income investments.

Recent remarks from ECB President Jean-Claude Trichet implying a possible rate hike had sent bonds tumbling earlier this week amid concerns about global rates rising. And on Tuesday, Treasury slid as many investors interpreted a speech by Federal Reserve Chairman Ben Bernanke as suggestive of future interest rate hikes. His words were echoed in a speech Wednesday by Fed Vice Chairman Donald Kohn Wednesday, which kept some selling pressure on Treasurys.

But, "we've had a month's worth of trading in the two days prior to today. To take a little bit of a rest is not a bad thing," said David Ader, bond strategist at RBS Greenwich Capital in Greenwich, Conn. He said, though, that the market remains volatile due to the "back-and-forth" of betting on whether the Fed will raise rates to control inflation, or keep them steady to allow the economy to grow.

The benchmark 10-year note rose 4/32 to 98 12/32 and yielded 4.07 percent, down from 4.10 percent late Tuesday.

The 2-year note rose 6/32 to 99 20/32 and yielded 2.81 percent, down from 2.93 percent late Tuesday. The 2-year note tends to be the most sensitive to rate changes. If rates climb and boost Treasury yields, too, the notes bought prior to the rate hike will have less attractive yields.

The 30-year long bond rose 2/32 to 94 27/32 and yielded 4.69 percent, down from 4.72 percent late Tuesday.

In late trading, the 10-year, 2-year and 30-year yields were unchanged.

The 3-month Treasury bill yielded 1.95 percent, down from 2.03 percent late Tuesday, and its discount rate was at 1.92 percent, down from 1.99 percent.

In economic data Wednesday, the Fed indicated in its Beige Book report on regional economies that the United States remains weak and that manufacturers are having a hard time passing high costs along to customers.