Bond yields held gains on Tuesday after the U.S. government's auction of three-year Treasury notes, the first batch of this week's $58 billion offering of new debt supply.
The Treasury Department auctioned $24 billion in three-year notes at a high yield of 1.125 percent, the highest since April 2011. The bid-to-cover ratio, an indicator of demand, was 3.33, little changed from 3.34 in May.
Indirect bidders, which include major central banks, were awarded 50.7 percent, while direct bidders, which includes domestic money managers, brought 9.7 percent.
"The 3 yr note auction, very sensitive to expectations of Fed rate hikes, was uneventful," said Peter Boockvar, chief market analyst at the Lindsey Group. "Bottom line, the highest yield in 3 months led to only ordinary demand as the complexion and trend of the U.S. Treasury market has clearly changed over the past 2 months."
Ten-year bond yields hit a eight-month high earlier as upbeat economic reports renewed expectations for a rate rise this year.
The Job Openings and Labor Turnover (JOLT) survey showed U.S. job openings rose to 5.4 million in April—their highest since December 2000.
Separately, wholesale Inventories rose 0.4 percent in April, versus forecasts for a 0.2 percent increase.
The yield on the 10-year note hit a session high of 2.44 percent—the highest since October 3 2014. It was last up 4 basis points at 2.42 percent. Meanwhile,
Concerns about Greece and its ability to avoid a debt default have renewed demand for safe-haven bonds after a hefty sell-off last week that sent benchmark yields in the U.S. and Europe to their highest levels this year.