The price of the 10-year Treasury note climbed 62.5 cents per $100 invested. Its yield, which moves in the opposite direction, fell to 3.66 percent from 3.74 percent late Tuesday.
The government's auction of 10-year notes drew greater interest than expected from investors, including foreign buyers. Indirect bidders, a rough proxy for foreign funds and banks, took 71 percent of the notes, the largest share since May 2003.
That follows a weaker auction on Tuesday of $32 billion in three-year notes. Foreign buyers showed little interest in the auction. A $16 billion auction for 30-year notes is set for Thursday and will cap $72 billion in new issues from the Treasury Department this week.
Bonds prices also rose after Fed Chairman Ben Bernanke downplayed inflation risks in testimony to Congress. He called inflation in the U.S. "quite low" and blamed higher prices on strong demand from emerging economies, not the central bank's monetary policy. He also said the Fed plans to follow through on its $600 billion bond-buying program to stimulate the economy and ease the unemployment rate.
The rally snapped a weeklong decline in Treasury prices. Investors have been dumping Treasurys as stronger economic reports continue to roll in. Traders seek safer investments like government bonds when the economy appears weaker.
In other trading, the price on the 30-year note added 75 cents per $100 invested, while its yield fell to 4.72 percent from 4.77 percent late Tuesday. The yield on the two-year Treasury note slipped to 0.80 percent from 0.85 percent.