Prices of U.S. Treasury securities rose strongly Thursday as the government's sale of $13 billion in 30-year bonds drew higher-than-average demand a day after Federal Reserve minutes damped bets policy makers would accelerate interest-rate increases.

Benchmark 10-year yields reached an almost four-week low and stocks dropped the most in two months as central bank meeting minutes indicated a rise in policy makers’ median projection for the main interest rate overstated the likely speed of policy tightening. The bond sale drew the lowest yield at an auction of the security since June and the bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.52, compared with an average of 2.36 for the previous 10 sales.

The minutes “confirmed a lower-for-longer time frame and spurred a bit of an up-trade in Treasurys,” said Ian Lyngen, a government-bond strategist at CRT Capital Group LLC in Stamford, Connecticut. “We’ve seen a significant retracement in equity prices, which spurred a flight-to-quality bid in the Treasurys markets.”

The yield on the current 30-year note fell six basis points, or 0.06 percentage point, to 3.52 percent at 4:44 p.m. in New York, according to Bloomberg Bond Trader prices.

Benchmark Yields

Benchmark 10-year yields declined five basis points to 2.65 percent. The 2.75 percent note due in February 2024 rose 3/8, or $3.75 per $1,000 face amount, to 100 28/32. The yield reached 2.61 percent the lowest level since March 14.

“Bonds are attractive at these levels,” said Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., in an interview with Trish Regan on Bloomberg Television.

Economists have reduced their projections on 10-year note yields for the second quarter to the lowest level since August. The benchmark yield will end June at 2.95 percent, according to economists’ forecasts in a Bloomberg News survey conducted April 4 to 9, down from the prediction for 3 percent in a survey held March 7 to 12.

Thursday’s 30-year auction yield was 3.525 percent, compared with a forecast of 3.522 percent in a Bloomberg News survey of eight of the Fed’s 22 primary dealers. Indirect bidders, an investor class that includes foreign central banks, purchased 43.3 percent of the notes, compared with an average of 41 percent for the past 10 sales.

Auction Update

Direct bidders, non-primary-dealer investors that place their bids directly with the Treasury, purchased 17.9 percent of the notes, compared with an average of 16 percent at the past 10 auctions.

Thirty-year bonds have returned 8.1 percent this year, compared with a 1.9 percent gain in the broader U.S. Treasurys market, according to Bank of America Merrill Lynch indexes. Long bonds lost 15.1 percent in 2013, versus a 3.4 percent decline by Treasurys overall.

Thursday’s auction is the final of three note and bond offerings this week. The U.S. sold $30 billion of three-year debt Tuesday at a yield of 0.895 percent and $21 billion of 10-year securities Wednesday at a yield of 2.72 percent. Bids for the $64 billion of notes and bonds sold this week by the government equaled 2.99 times the debt sold, the most demand for this series of auctions since December.

The U.S. announced it will sell $18 billion in five-year inflation-indexed debt on April 17.

Market Outlook

The central bank has kept its target for overnight bank lending in a range of zero to 0.25 percent since December 2008. Policy makers are in the process of unwinding the bond-purchase program they have used to help support the economy.

Fed Chair Janet Yellen suggested last month the central bank may raise its benchmark rate in the middle of 2015. In forecasts released with the policy statement in March, officials upgraded projections for gains in the labor market and predicted the main interest rate will rise to 1 percent by the end of 2015, higher than previously forecast.

Futures prices put the likelihood the Fed will start raising rates in July 2015 at 62 percent, based on trading on the CME Group Inc.’s exchange. The chances for a raise increase in June 2015 fell to 41 percent, compared with 54 percent on April 4.

“The market is undergoing a re-pricing of the curve, given the fact that it’s pushing out the lower for longer theme,” said Sean Murphy, a trader in New York at primary dealer Societe Generale SA. “We’re seeing a correction occurring in the curve.”

The central bank purchased $3.2 billion of Treasurys maturing from June 2018 to December 2018 Thursday.

Economic Update

Treasurys remained higher Thursday even as a report showed jobless claims decreased by 32,000 to 300,000 in the week ended April 5, the lowest since May 2007, the Labor Department said in Washington.

The yield on the five-year note dropped to as low as 1.55 percent, the least since March 19. It touched 1.81 percent on April 4, the highest since September.

The difference between five- and 30-year yields, the yield curve, reached 197 basis points after dropping to 178 basis points on March 31, the least since October 2009.

A yield curve plots the rates of bonds of the same quality, but different maturities. It steepens when yields on shorter- maturity notes fall, those on longer-dated bonds rise, or both happen simultaneously. Longer-term bonds tend to rise or fall based on the outlook for inflation, while shorter maturities are anchored by the Fed’s policy rate.

“The market reacted big to the Federal Open Market Committee minutes,” said Justin Lederer, an interest-rate strategist at primary dealer Cantor Fitzgerald LP in New York. “I don’t think you’ll see a 2 percent five-year note just yet.”