Treasurys add to gains after 10-year note auction

US 10-YR
US 30-YR

Treasurys extended earlier gains on Wednesday after the government's auction of 10-year notes, the secondset of this week's $67 billion in U.S. debt supply.

The Treasury Department auctioned $24 billion in 10-year notes at a high yield of 2.439 percent, the lowest since June 2013. The bid-to-cover ratio, an indicator of demand, was 2.83, versus a recent average of 2.69.

In the 'when-issued' market, the notes were expected to sell at a yield of 2.450 percent.

Indirect bidders, which include major central banks, were awarded 47 percent, close to the 44 percent recent average.

Benchmark 10-year notes were up 11/32 in price with a yield of 2.41 percent. Meanwhile, the 30-year bond rose 21/32 in price to yield 3.24 percent.

On Thursday the Treasury will auction $16 billion in 30-year bonds, which some traders reckon might not fetch strong demand due to their low yields.

Bond yields were higher overnight on overseas selling before the news that American spending at stores and gas stations did not grow in July. Economists polled by Reuters had projected a 0.2 percent gain.

As traders prepared for the rest of this week's bond supply, they have kept an eye on developments abroad and whether conditions might worsen and become a drag on the global economy.

Ukraine denounced Russia's aid convoy heading for its eastern border, a move which Kiev and the West see as a pretext for an invasion of that region.

Meanwhile, Israelis and Palestinians have not reached a deal to end a month-long war in Gaza as a three-day ceasefire comes to a close.

Ten-year yields have not strayed far above last week's 14-month low of 2.349 percent.

—By With Reuters