NEW YORK: US Treasuries were steady on Tuesday before the government is due to sell $24 billion in three-year notes, the first sale of $62 billion in coupon-bearing debt supply this week, and with heavy corporate debt sales also expected.
New government and corporate debt supply is in focus with no major economic releases due until Friday's retail sales report for April.
"You are getting a bit of supply pressure," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.
US bond yields are largely range-bound as investors evaluate when the Federal Reserve is likely to next raise interest rates. Weaker-than-expected job gains in April reduced expectations that the Fed will lift rates at its June meeting.
Falling expectations that an interest rate hike is likely in the near term may help demand for Tuesday's auction of three-year notes.
At the same time, the low expectations already priced into the debt may reduce the prospect of further gains.
"Given how much we've already priced out the Fed, it's tough for the front-end to rally a whole lot," said Goldberg.
The new three-year notes are expected to sell at yields of 0.88 percent, around a basis point higher than where the notes are trading in the secondary market, according to trading in the "when issued" market.
US bond prices currently indicate that investors do not expect an interest rate increase until July 2017.
Benchmark 10-year notes gained 2/32 in price on Tuesday to yield 1.75 percent, down from 1.76 percent on Monday. The yields have fallen from 1.94 percent on April 26, but are higher than a one-month low yield of 1.71 percent on Friday, after April's disappointing jobs report.
The US government will also sell $23 billion in 10-year notes on Wednesday and $15 billion in 30-year bonds on Thursday.