Yield curve flattest since 2007 ahead of auctions

NEW YORK: The US yield curve flattened to its tightest spread since 2007 on Tuesday ahead of an afternoon auction for 3-year notes.

The Federal Reserve will sell $33 billion worth of 3-year notes in an auction that will close at 1 p.m. EDT (1700 GMT) on Tuesday. An additional $22 billion in 10-year notes is scheduled for Wednesday and $14 billion in 30-year bonds will be offered on Thursday.

"Auctions have been going OK recently in spite of the increases in size since February," said Thomas Simons, money market economist at Jefferies & Co in New York. "But there's always a concern that buy-side demand doesn't keep up."

The portion of the yield curve between 5-year notes and 30-year bonds flattened to a low of 20.14 basis points, the tightest spread in over a decade.

Yields were up slightly across the board, with benchmark U.S 10-year note trading at 2.871 percent at 9:29 a.m. EDT (1329 GMT), up 1 basis point from Monday's close.

Job openings and labor turnover data for May were to be released by the Bureau of Labor statistics at 10 a.m. EDT (1400 GMT).

Analysts say the most important economic release of the week will be Thursday's core consumer price index inflation data.