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Bond prices flat on corporate supply, US debt demand

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U.S. Treasurys prices were mostly flat on Tuesday, pressured by corporate bond sales and supported by demand for relatively high U.S. yields, while traders also awaited Friday's U.S. jobs report.

Pharmaceutical company Actavis Plc launched a $21 billion corporate bond deal, the second-largest on record according to Thomson Reuters unit IFR. Analysts said investors sold some safe-haven Treasurys in order to buy some of the debt and that the size of the sale could balloon to $30 billion if demand exceeds expectations.

In addition, triple-A-rated Exxon Mobil planned to sell $7 billion in corporate bonds on Tuesday, according to IFR.

"This is about issuance," said David Ader, head of government trading at CRT Capital in Stamford, Connecticut.

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In terms of pressure on Treasurys prices, he said: "Supply can take its pound of flesh, so to speak."

Continued demand for higher U.S. bond yields compared with those from Europe, however, supported Treasurys prices and prevented a sell-off in the debt. Bond yields move inversely to prices.

Benchmark 10-year U.S. Treasury note yields were last at 2.10 percent after hitting 2.12 percent earlier in the session, their highest since Feb. 23. German 10-year Bund yields were last at 0.36 percent, not far from a record low of 0.28 percent hit on Feb. 26.

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Traders' reluctance to take big bets ahead of Friday's monthly U.S. non-farm payrolls report, which economists polled by Reuters expect will show an increase in 240,000 jobs in February, also kept prices muted. That February estimate would mark a decrease from 257,000 jobs in January.

"I don't think there's a lot of aggressive positioning heading into Friday's number," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott LLC in Philadelphia.

U.S. 30-year Treasury bonds yields were at 2.69 percent, unchanged from late Monday. U.S. five-year notes were two basis points higher with the yield at 1.59 percent after hitting a more than one-week high of 1.6070 percent earlier in the session.

U.S. three-year notes were last unchanged in price to yield 1.05 percent.