TREASURIES-Prices gain for third session on accommodative outlook
* Treasury to sell $33 bln 2-year notes at 1 p.m. EDT (1700 GMT
* German Ifo sentiment data weighs on bunds
* September consumer confidence forecast at 79.9
NEW YORK, Sept 24 (Reuters) - U.S. Treasuries prices rose on Tuesday for the third straight session, aided by expectations for a longer period of accommodative Federal Reserve monetary policy.
The firmer trend was in line with bunds, which rose after German business sentiment improved less than forecast.
Benchmark 10-year notes rose 7/32 in price, their yields easing to 2.68 percent from 2.71 percent late on Monday. Thirty-year bonds rose 11/32. Their yields eased to 3.71 percent from 3.73 percent late on Monday.
The prospect of $97 billion in coupon supply this week, beginning with the $33 billion sale of two-year notes at 1 p.m. EDT (1700 GMT) did not thwart the market's march higher.
"Only weeks ago, the two-year yield was trading north of 50 cents - 0.534 percent before the August non-farm payrolls report. But after the weaker non-farm payrolls and, most notably, the FOMC's decision last Wednesday not to trim its bond purchases, two-year yields have traded back to the mid 30 cents with expectations for zero bound rates remaining well into 2015, if not 2016," said Justin Lederer, Treasury strategist at Cantor Fitzgerald in New York.
Treasuries prices have risen and yields have fallen since the Federal Reserve decided to put off unwinding any of its monetary accommodation until it had more confidence in the sustainability of the still-subdued economic recovery.
At its policy meeting last week, the Fed decided not to trim its large-scale asset purchases, citing strains in the economy from tight fiscal policy and higher mortgage rates. Fewer asset purchases would put downward pressure on bond prices and upward pressure on yields.
Given the rate outlook, the market should have little trouble absorbing the two-year Treasury notes, the shortest duration notes being auctioned this week, Lederer said.
"We expect the sale to be underwritten at or very close to its current yield of 0.338 percent," Lederer said.
Conflict over raising the U.S. debt limit tended to support U.S. debt, but Moody's, the debt rating agency, said it expected the U.S. debt limit to be increased.
On the economic data front, the Conference Board's September consumer confidence index due at 10 a.m. (1500 GMT) is forecast at 79.9. The S&P Case Shiller home price indexes showed home prices rose in July versus the prior month and were up 8.8 percent for the 12 months ended in July.
"The market snoozed over it all with the firmer tone of the overnight session holding," said David Ader, Treasury strategist at CRT Capital Group in Stamford, Connecticut.