NEW YORK -- U.S. Treasuries rose on Tuesday after the first of three government debt auctions this week found solid interest among investors.
Dealers have warmed up to bonds lately following a three-month selloff, especially after weak data on jobs and factories quashed speculation about a possible resumption of interest rate hikes.
The successful sale of $16 billion in three-year notes sparked optimism about the rest of the week's sales, although some analysts cautioned against any excessive jubilance.
They noted that the Treasury is considering abolishing the three-year from its issuance offerings, arguing that the prospect of such scarcity may have artificially bolstered demand for the sale.
"The strong demand you see today may not be evident in the 10- and 30-year auction we have tomorrow," said William Sullivan, chief economist at JVB Financial Group.
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Despite such words of warning, the market's fears over the fresh debt supply appeared soothed for the moment. Benchmark 10-year notes marched 9/32 higher and were offering a yield of 4.77 percent. That was off from 4.81 percent on Monday, and down 10 basis points in just over a week. Bond prices move inversely to their yields.
The new three-year notes were sold at a high yield of 4.80 percent and garnered bids for 2.97 times the amount on offer -- the highest since its reintroduction back in 2003. Existing three-year notes were up 3/32 and yielding 4.82 percent.
Indirect bidders, which include customers of primary dealers and foreign central banks, took home $5.07 billion, or about 31.7 percent of the issue, well above the 23.8 percent average seen in 2006.
With little in the way of data this week, investors would have to rely on cues from Federal Reserve officials for a sense of direction.
But even those guideposts would likely prove elusive. Speeches on Tuesday from a string of officials, including Chairman Ben Bernanke, yielded nothing in the way of comments on the current economy and policy.
The next two legs of the Treasury's refunding were still to come, with $13 billion in 10-year notes and $9 billion of 30-year bonds coming to market on Wednesday and Thursday, respectively.
For now, five-year notes were up 6/32 and yielding 4.76 percent, while the 30-year bond had risen 18/32 for a yield of 4.88 percent. Two-year debt yields slipped to 4.92 percent from 4.93 percent.
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