Yields rise on improving risk appetite

• The Treasury saw good demand for $44 billion in two-year notes, the largest two-year sale on record. The auction had a bid to cover ratio of 2.68 times.

NEW YORK: US Treasury yields rose on Tuesday as improving risk appetite boosted stocks and reduced demand for safe-haven U.S. bonds, and after Treasury sold a record amount of two-year notes to solid demand.

U.S. stocks jumped and the S&P 500 crossed 3,000 points as optimism about a potential coronavirus vaccine and a revival in business activity helped investors overlook simmering Sino-U.S. tensions.

The Treasury saw good demand for $44 billion in two-year notes, the largest two-year sale on record. The auction had a bid to cover ratio of 2.68 times.

Two-year Treasury yields were last 0.178%. They have risen from a record low of 0.105% on May 8 but have held below 0.20% since that date.

The Treasury will also auction $45 billion in five-year notes on Wednesday and $38 billion in seven-year notes on Thursday.

"The market right now remains range bound, even with all the supply and the Fed tapering their purchases," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. "I think supply at some point will be a factor, but it's not yet."

The United States government has been increasing the size of its debt auctions as it finances spending meant to blunt the economic impact of business shutdowns designed to stem the spread of the novel coronavirus.

The Federal Reserve has been reducing its daily bond purchases, after ramping them up to record levels in March to help stabilize the market as investors struggled to make trades due to worsening liquidity.

Benchmark 10-year note yields rose four basis points to 0.697%.

The yields have traded in a range from 0.543% to 0.785% since the beginning of April.