NEW YORK (MarketWatch) -- Treasury prices gained and yields fell Thursday, as bond traders' confidence that concerns about prospects for sluggish economic growth will keep U.S. debt "bulletproof" overshadowed the government's plan to sell a record amount next week.

Treasurys thus resumed a rally that's run for nearly two weeks, pushing 2-year note yields down to the lowest level seen in 10 months. Bond prices move inversely to their yields.

Yields on benchmark 10-year notes fell 5 basis points to 3.32%, which would be the lowest on a closing basis since Oct. 20.

Two-year note yields declined 7 basis points to stand at 0.68%, the lowest since mid-January.

Investors' "interest in the safest debt in the world remains in high favor," said Kevin Giddis, managing director of fixed income for Morgan Keegan & Co.

Looking to next week's debt auctions, the Treasury Department said it will sell $22 billion in 2-year notes on Monday, matching the record amount of the securities sold last month.

That sale will be followed by $42 billion in 5-year notes on Tuesday and $32 billion in 7-year notes the day after that -- all crammed in before the Thanksgiving holiday. The latter two sales set new records for the most ever sold and are $1 billion more than October's sales.

Earlier this week, Federal Reserve Chairman Ben Bernanke supported bond bulls by reiterating that interest rates would remain low for some time. Read more on Bernanke's speech to the Economic Club of New York.

Recent economic data have also tended to be weaker than anticipated, calling into question how quick or robust of a recovery the U.S. can expect.

Also, as the end of the year approaches, investors and traders tend to unwind short positions and book profits on good bets made during the year, analysts said. That activity tends to support Treasurys, which are bought to show less risky balance sheets.

"The market has embraced a view that the Fed will not tweak its rate policy before it makes amends with the quantitative-easing side of monetary policy," said George Goncalves, chief fixed-income rates strategist at Cantor Fitzgerald faxless payday loans. "We do not view supply derailing the recent bulletproof market behavior in the front-end as the year-end scramble for good collateral will keep rates markets bid."

Assets that tend to benefit when investors want riskier, higher-yielding assets -- equities, oil and gold -- all fell on Thursday. The U.S. dollar, which tends to improve as risk appetite fades, gained during the session. See more on the dollar.

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Treasurys remained up after the Labor Department said initial claims for unemployment benefits were flat in the latest week at 505,000 -- the 53rd week in a row in which they've been above the half-million mark. See more on jobless claims.

"To be certain, 500,000 people filing an initial claim in any given week is a terribly high number," Dan Greenhaus, chief economic strategist at Miller Tabak, wrote in an email. It's also still above a level associated with a positive print in the monthly payrolls report, he said.

Treasurys also held their gains after the Conference Board's index of leading economic indicators rose 0.3% in October, less than the 0.4% increase predicted by economists. The Federal Reserve Bank of Philadelphia's manufacturing index rose more than anticipated to 16.7 this month from 11.5 in October. See more on leading indicators.

Rounding out Thursday's data, a report from the Mortgage Bankers Association showed delinquencies on home loans rose to a new record.

Bond Report: Treasurys advance as risk appetite wanes