US market strategists said the source of optimism in the market were reports that a German official said on Monday that Germany was considering running two parallel funding operations simultaneously in case of an emergency. "Risk assets bounced," said William O'Donnell, head of US rates strategy at RBS Securities in Stamford, Connecticut. "This spasmodic price action may be what we're in for until the Federal Open Market Committee fills in the templates for their rate, growth and inflation projections on Wednesday." Treasuries also came under pressure ahead of three auctions scheduled for this week in which the Treasury Department will sell a total of $99 billion in Treasury notes. The first auction, $35 billion in two-year notes, will take place on Tuesday at 1 p.m. (1800 GMT). Another $35 billion sale -- this time of five-year notes -- is set for Tuesday, while a $29 billion sale of seven-year notes will take place on Wednesday. "The three auctions will likely need concession with China out, and we look for fives to be the strongest of the three," wrote George Goncalves, head of US rates strategy at Nomura Securities in New York. Celebrations of the Lunar New Year holiday will affect markets in China, Hong Kong, Singapore and South Korea this week. The 10-year Treasury note was last trading 8/32 lower in price and yielding 2.06 percent, up from 2.03 percent at Friday's close. The 30-year Treasury bond was last off 20/32 in price for a yield of 3.14 percent, up from 3.10 percent late on Friday.
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