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Treasury Department auctions $26B of 2-year notes at a high yield of 0.948%

In this Sept. 24, 2014 photo, traders work in the ten-year bond pit on the floor of the CME Group in Chicago.
M. Spencer Green | AP Photo
In this Sept. 24, 2014 photo, traders work in the ten-year bond pit on the floor of the CME Group in Chicago.

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.

Symbol
Yield
 
Change
%Change
US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
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US 10-YR
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US 30-YR
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The Fed's meeting is slated for Dec. 15 and 16, and the most important piece of U.S. data central bank officials will get before that meeting is the November jobs report Dec. 4.

Yields on 10-year Treasurys were at 2.2447 percent on Monday, after closing at 2.262 percent on Friday.

Meanwhile, 30-year bond yields were at 2.9996 percent after ending at 3.019 percent last week.

Ahead of Thursday's national Thanksgiving holiday, another data focus will be the second reading of third-quarter gross domestic product (GDP) on Tuesday. Analysts expect to see an upward revision to the initial estimate.

On Monday, the October reading for the Chicago Federal Reserve national activity index came in at -0.04.

Existing home sales fell more than expected in October, according to the National Association of Realtors.

Oil prices were mixed, with WTI futures settling 0.4 percent lower. Brent futures rose 0.7 percent.

Other commodities, including iron ore, zinc and nickel, were trading lower on concerns of slowing demand in China. Copper fell to more than a six-year low.