NEW YORK: US Treasury yields fell from six-month highs on Tuesday as some buyers came back to the market ahead of the government's sale of $24 billion in new three-year notes, the first sale of $64 billion in new supply this week.
US debt had weakened earlier in the day in line with German government bonds, which have been under pressure in recent weeks for reasons that some attribute to optimism that inflation may have bottomed in the euro region.
Many investors have been unwilling to buy bonds until the selloff shows signs of stabilizing, which has added to the weakness, though higher yields lured some asset managers back to the market on Tuesday.
"We saw some real money buying off the lows this morning," said Sean Murphy, a Treasuries trader at Societe Generale in New York.
That demand may help the Treasury's auctions this week if it continues.
The government will also sell $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds on Thursday.
Heavy corporate issuance has weighed on Treasuries, however, and may keep the market volatile.
"Issuance has been tremendous and there hasn't been a lot of support as the market backs up," Murphy said.
Benchmark 10-year notes were last up 11/32 in price to yield 2.25 percent, after earlier rising as high as 2.37 percent, the highest since Nov. 14. Thirty-year bonds gained 25/32 in price to yield 3.00 percent, after earlier increasing to 3.13 percent, the highest since November 7.
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