The Treasury Department on Monday auctioned $26 billion in 2-year notes at a high yield of 0.948 percent, the highest since April 2010. The bid-to-cover ratio, an indicator of demand, was 3.15 versus a recent average of 3.35.
Indirect bidders, which include major central banks, were awarded 45.7 percent. Direct bidders, which include domestic money managers, bought 19 percent, versus a recent average of 13 percent.
Following the auction, U.S. sovereign bond yields moved lower. They had been largely unchanged on the day after housing data and after San Francisco Fed President John Williams said over the weekend that there is a "strong case" for raising rates next month.
"Assuming that we continue to get good data on the economy, continue to get signs that we're moving closer to achieving our goals" and are gaining confidence that inflation will move back toward the Fed's 2 percent target, there's "a strong case that can be made in December to raise rates," Williams told reporters, speaking at the University of California at Berkeley on Saturday.