NEW YORK: US Treasuries were steady on Tuesday as some buyers came back to the market, helping the government sell $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, and crowded positioning has added to the rout, 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.
The stronger tone helped the Treasury auction three-year notes to strong demand at a 1.00 percent yield. The ratio of total bids to the amount of three-year notes offered was 3.34, higher than April's 3.25 and matching the level seen in February.
Wednesday's $24 billion 10-year note sale and Thursday's $16 billion 30-year bond sale may be more challenging.
Recent 10-year auctions have gone well and a higher yield may attract overseas interest, said Ian Lyngen, senior government bond strategist at CRT Capital in Stamford, Connecticut. However, 30-year bonds "have been much more challenging to take down so we think a larger concession will be needed," he said.
Heavy corporate issuance has also weighed on Treasuries and may keep the market volatile.
"Issuance has been tremendous and there hasn't been a lot of support as the market backs up," said Societe Generale's Murphy.
Benchmark 10-year notes were last up 2/32 in price to yield 2.28 percent, after earlier rising as high as 2.37 percent, the highest since Nov. 14. Thirty-year bonds gained 10/32 in price to yield 3.03 percent, after earlier increasing to 3.13 percent, the highest since Nov. 7.
The release of retail sales data for April will be in focus on Wednesday.
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