(Bloomberg News) Treasury 10-year note yields decreased to an all-time low as concern Europe's sovereign-debt crisis will cripple the region's financial institutions underpinned demand for the safest assets.

Yields on 30-year bonds touched the lowest level since January 2009 on speculation Federal Reserve Chairman Ben. S. Bernanke may signal in a speech this week that the central bank will purchase longer-duration debt while shedding shorter maturities. Ten-year notes are the most overvalued ever, according to a financial model created by Fed economists that includes expectations for interest rates, growth and inflation.

"These yield levels are going to be persistent," said Ira Jersey, an interest-rate strategist in New York at Credit Suisse Group AG, in an interview on "Bloomberg Surveillance" with Tom Keene. "Given the weakness in the economic data and a lot of fears in Europe, yields could stay here for the better part of four, five, six months, if not longer." The firm is one of the 20 primary dealers that trade with the Fed.

Benchmark 10-year note yields decreased one basis point, or 0.01 percentage point, to 1.98 percent at 12:06 p.m. in New York, according to Bloomberg Bond Trader prices. The 2.125 percent securities maturing in August 2021 rose 3/32, or 94 cents per $1,000 face amount, to 101 9/32. The yields earlier slid to 1.9066 percent, the lowest on record.

Long Bonds

A gain in 30-year bonds pushed yields down seven basis points to 3.24 percent after they fell to 3.20 percent, a level not seen in more than two years. Two-year note yields were little changed at 0.20 percent.

Yields pared their decreases as the Standard & Poor's 500 Index reduced its drop to 1.9 percent after earlier today falling 2.9 percent.

Longer-term Treasuries led today's gains as investors speculated the Fed may buy those maturities to support the economy under what is known as Operation Twist.

"Bernanke will not sit around and wait for things to deteriorate," said Sean Murphy, a trader in New York at Societe General SA, a primary dealer. "The market has strengthened the case for him to provide further accommodation. The most viable option for now is the twist."

The central bank acquired today $730 million of Treasuries maturing from April 2013 to February 2014. The purchases are part of the Fed's policy to continue to reinvest the proceeds of maturing assets on its balance sheet to prevent a tightening of monetary policy.

Five-Year Notes

Yields on five-year notes gained three basis points to 0.89 percent after a report showed U.S. service industries unexpectedly expanded at a faster pace in August and on speculation the Fed won't increase holdings of the maturities.

The Institute for Supply Management's index of U.S. non-manufacturing businesses increased to 53.3 last month from 52.7 in July, the Tempe, Arizona, group reported today. Economists forecast the gauge would drop to 51, according to the median estimate in a Bloomberg News survey. A reading above 50 signals expansion.

Bernanke will speak on the U.S. economic outlook Sept. 8 in Minneapolis. Fed officials will gather for a two-day meeting Sept. 20 that was originally scheduled to last one day in order to "allow a fuller discussion" of the economy and the central bank's possible policy response.

The U.S. had zero job growth in August, and the unemployment rate held at 9.1 percent, the Labor Department's payrolls report showed Sept. 2.

Term Premium

The so-called term premium, which Bernanke cited in a 2006 speech in New York as a useful guide in setting monetary policy, was negative 0.51 percent today, compared with an average 0.84 percent for the gauge this decade through mid-2007. The term premium touched negative 0.55 percent on Sept. 2, the lowest ever according to Bloomberg data beginning in 1976.

"Investors aren't buying for yield right now," said George Goncalves, head of interest-rate strategy at Nomura Holdings Inc., a primary dealer. "We are further along in the deleveraging process than we were when the crisis began and people are still willing to buy Treasuries, which tells you that concern over credit globally remains."

Demand for longer maturities, which are most sensitive to inflation outlook, cause the extra yield that investors get for buying 10-year notes instead of two-year debt to narrow to 1.74 percentage points, the least since March 2009.

Deutsche Bank AG Chief Executive Officer Josef Ackermann said yesterday in Frankfurt that conditions in stock and bond markets are reminiscent of the 2008 financial crisis.

The Swiss franc dropped the most ever against the euro after the central bank imposed a ceiling on the currency's exchange rate and said it will defend the target with the "utmost determination."

Treasuries have returned 8.1 percent in 2011, heading for their best year since 2008, according to a Bank of America Merrill Lynch index. An index of government bonds around the world has increased 4.8 percent in 2011.