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U.S. Treasury debt prices were steady Tuesday after a $25 billion auction of benchmark 10-year notes garnered decent demand, but results did little to offset caution ahead of the 30-year note sale.
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The 10-year note auction came a day after a solid $40 billion three-year note auction, all part of this week's $81 billion Treasury refunding plan.
"It was a decent auction. Not nearly as strong as yesterday's three-year auction, but it came right at secondary market level," said Rick Klingman, managing director of Treasury trading at BNP Paribas in New York. "The indirect bids were still at a healthy level. Overall a very fair auction."
Benchmark 10-year notes were trading 2/32 higher in price to yield 3.48 percent, down from 3.49 percent late Monday, while 30-year bonds were 3/32 lower to yield 4.40 percent.
In the latest 10-year note auction, indirect bids, often viewed as a proxy for foreign demand, totaled $11.73 billion.
The notes were sold at a high yield of 3.470 percent, within market expectations, and 82.49 percent of the bids awarded at the high.
The bid-to-cover ratio, a gauge of overall auction demand, was 2.81 at the latest 10-year auction. It was above 2.49 at the August refunding and a long-term average of 2.28.
Non-competitive bids absorbed $106.0 million of the auction while primary dealers, Wall Street houses that are obligated to underwrite the sale, got $11.94 billion. The $16 billion 30-year bond auction is set for Thursday.
The U.S. bond market will be closed Wednesday in observance of Veterans Day.
Although the two latest auctions have served to underscore investors' appetite for U.S. government debt, investors have been more willing to put money in the shorter-dated part of the yield curve as they fret about the inflation outlook, according to analysts.
With Tuesday light on economic data, traders focused on remarks by Federal Reserve officials that struck a cautious note about the economy. A week ago, the U.S. central bank pledged it would hold interest rates near zero and stick to its ultra-loose monetary policy until economic growth is self-sustaining.
Atlanta Fed President Dennis Lockhart and San Francisco Fed chief Janet Yellen said in separate appearances Tuesday that the U.S. economic recovery is fragile. This would require the central bank's full effort until a rebound is considered durable.
Weakness in Wall Street stocks, anxiety over Britain's credit-worthiness and weak overseas economic data also spurred a safety bid for Treasurys.
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Data is a real-time snapshot *Data is delayed at least 15 minutes