NEW YORK: Treasury yields at 14-month highs lured buyers on Tuesday and the bond market ended higher.
Long-dated Treasuries outperformed shorter maturities.
Demand for a $32 billion three-year Treasury note auction was weak. After the sale, however, buyers entered the market, lured by lower prices and the higher yields, pushing the market into the plus column.
Treasury prices fell early in the session, in line with global bonds, after the Bank of Japan held off adopting further monetary easing measures.
"(The BOJ seemed) to be telling the market they are taking the foot off the (monetary easing) pedal. People had wanted a lot more," said Jason Rogan, managing director of Treasuries at Guggenheim Partners in New York.
The US Treasury market has also been enmeshed in a discussion about when the Federal Reserve will start to cut back the support it has provided markets through large-scale purchases of Treasuries and mortgage-backed securities.
Tentative signs of an improving economy and steady, though moderate, job growth have raised the possibility in the eyes of some that the Fed could begin to change its accommodative monetary policy course.
But some are starting to think the sell-off in Treasuries has been overdone and that rumors of the eventual slow death of quantitative easing have been exaggerated.
Early signs of this were evident on Tuesday.
"There was much better buying of mortgage-backed securities and Treasuries on the dip today," said Thomas di Galoma, head of fixed-income sales at ED&F Capital Markets.
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