Boeing sold $25 billion of bonds on Thursday, adding to a surge in issuances by companies.

Photo: jason redmond/Agence France-Presse/Getty Images

U.S. government bond prices edged lower Friday even as stocks fell sharply, a sign that some demand for Treasurys was being soaked up by a record-setting influx of new debt into the market.

The yield on the benchmark 10-year U.S. Treasury note settled at 0.641%, according to Tradeweb, compared with 0.619% Thursday.

Yields, which rise when bond prices fall, as the S&P 500 dropped 2.8%—a break from the typical pattern in which stock declines fuel demand for safer assets and gains in Treasurys.

One factor that analysts say has kept yields from dropping lower this week has been the large number of new bonds that investors can buy. Companies last month sold more than $227 billion of investment-grade corporate bonds in the U.S. market, breaking the previous record of $194 billion set a month earlier, according to Dealogic.

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The boom in issuance was capped Thursday when Boeing Co. sold $25 billion of bonds, more than $16 billion of which carried maturities of 10 years or more.

The corporate bond sales—which have been fueled by businesses trying to raise cash so they can weather disruptions caused by the coronavirus pandemic—have come as the Treasury Department has also boosted debt auctions to fund a ballooning federal budget deficit.

Though the bulk of its borrowing has come in the form of short-term bills that mature in one year or less, the department has also increased the size of its longer-term debt sales and is expected to announce plans to issue more longer-term debt in its quarterly refunding statement next week.

Increases in corporate and government bond sales can lift Treasury yields, due to supply-demand dynamics, as fixed-income investors have more options to choose from.

Pushing in the opposite direction, the Federal Reserve has been buying large amounts of Treasurys—and has promised to buy corporate bonds—as part of its efforts to help the economy and improve liquidity in the market. The central bank, however, hasn’t been buying as many longer-term bonds as some had expected, and it passed on an opportunity this week to announce a shift in its strategy.

Not including inflation-protected securities, roughly 61% of the Treasurys the Fed has bought since March have carried maturities of five years or less, according to NatWest Markets. That compares with just 14% for the same category of bonds in the last stage of the Fed’s previous bond-buying program—known on Wall Street as quantitative-easing or QE—that followed the 2008 financial crisis.

Heading into the Fed’s policy meeting on Wednesday, there had been some expectation that the central bank “would announce a more normal plan and that that would look something more akin to past QEs,” said John Briggs, head of Americas strategy at NatWest. The Fed’s decision not to do that, coupled with the heavy supply of new bonds, has been a drag on Treasurys, he added.

Write to Sam Goldfarb at sam.goldfarb@wsj.com

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