Prices rise on light data, Fed double buy-back

U.S. Treasurys

U.S. Treasurys prices edged up on Tuesday on a light day of data before Friday's employment report for November and ahead of the Federal Reserve's double buy-back in its bond purchase program.

Investors are scouring data for indications of whether the U.S. economy is gaining enough strength for the Fed to begin paring back its $85 billion-a-month program.

The Fed is now seen by most as likely to begin reducing purchases at its March meeting, but some think that could be brought forward to January, or even this month, if employment data comes in strong.

There are no large releases scheduled for Tuesday, giving traders a break from an otherwise relatively heavy week.

"Data is pretty light today. It will pick up later in the week with a slew of data culminating in payrolls on Friday,'' said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York.

(Read more: Get ready for 10 percent drop in 2014: Goldman)

The ADP employment report and new home sales data will be released on Wednesday, while Thursday's releases will include gross domestic product for the third quarter and jobless claims for the most recent week.

At the same time Treasuries were supported on Tuesday by two scheduled Fed buy-backs. The central bank bought $940 million of notes due from 2024 to 2031. It will purchase between $3 billion and $4 billion of notes due 2019 and 2020 later on Tuesday.

Benchmark 10-year notes were last up 4/32 in price to yield 2.78 percent, down from 2.80 percent late on Monday. Thirty-year bonds rose 8/32 in price to yield 3.84 percent, down from 3.86 percent.

—By Reuters