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Treasury Department auctions $35B of 5-year notes at a high yield of 1.67%

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Scott Olson | Getty Images

U.S. sovereign bond yields fell on Tuesday amid a slew of economic data and after another round of bond auctions, which gave prices a boost on Monday.

The Treasury Department auctioned $35 billion in 5-year notes Tuesday at a high yield of 1.67 percent.

The bid-to-cover ratio, an indicator of demand, was 2.52.

Indirect bidders, which include major central banks, were awarded 56.7 percent, below a recent average of 60 percent. Direct bidders, which includes domestic money managers, bought 10.1 percent, above a recent average of 6 percent.

"The auction was a non event and yields at or near multi year highs didn't bring out demand of substance today or yesterday for the likely reason that the path of rate hikes in 2016 is completely up in the air," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.

On the data front, the U.S. economy grew at a healthier clip in the third quarter than initially thought, growing at a 2.1 percent rate.

Symbol
Yield
 
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%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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Consumer confidence fell in November to 90.4 — its lowest reading for the year — from 97.6. Economists expected the index to rise to 99.5.

S&P/Case-Shiller home price data showed prices rose 5.5 percent in September, more than the expected 5.2 percent increase.

Yields on 10-year Treasury notes traded around 2.235 percent on Tuesday, after closing at 2.25 percent on Monday. Earlier, they hit a session low 2.2035 percent.

Meanwhile, 30-year bond yields traded around 2.9988 percent after ending at 3.007 percent in the previous session. Earlier, they traded below 3 percent and hit a session low of 2.9676 percent.

The Treasury Department is set to auction $55 billion in four-week bills, $13 billion in two-year floating rate notes and $35 billion in five-year notes Tuesday.

Treasury prices saw gains after strong bidding was seen at a $26 billion two-year debt sale on Monday.

The big number markets are waiting for is the November employment report due on December 4, after October's report of 271,000 nonfarm payrolls and a surprise pickup in wages. That report will have direct bearing on the Fed's rates decision on December 16.

"The first interest rate increase in December is becoming very likely. However, we have to differentiate between the first announcement of an interest rate increase and the start of the tightening cycle. I'd argue that we're actually already some way into this tightening cycle, which started at the tapering announcement in 2013," said Enzo Puntillo, head of fixed income at asset manager, GAM in Zurich.

Meanwhile, the markets are slowing down and preparing for holiday mode, with trading closed Thursday for the Thanksgiving holiday.

Oil price fluctuations will remain in focus Tuesday, after sharp moves were seen on Monday following comments from oil cartel OPEC's largest producing Saudi Arabia pledged to work towards oil price stability, sending prices up from session lows.

Brent futures for January climbed $1.09 to $45.92 a barrel, while U.S. West Texas Intermediate (WTI) crude was also up 92 cents at $42.67 a barrel, as strength in the dollar capped gains.

The U.S. dollar index briefly hit 100 for the first time since March on Monday and continued to hold higher against major world currencies.