Treasury Dept auctions $34 billion of 5-year notes at a high yield of 1.129%

The outlook for bond markets
The outlook for bond markets

U.S. sovereign bond prices held higher after the Treasury Department auctioned $34 billion in five-year notes at a high yield of 1.129 percent on Tuesday. The bid-to-cover ratio, an indicator of demand, was 2.39, slightly below a recent average of 2.42.

Indirect bidders, which include major central banks, were awarded 61.4 percent, above a recent average of 59 percent. Direct bidders, which include domestic money managers, bought 4.4 percent, below a recent average of 8 percent.

Five-year notes last yielded about 1.1119 percent, having closed the previous session at 1.127 percent. Bond yields move inversely to prices.

"U.S. debt auctions haven't been hugely supported lately," Kit Juckes, strategist at Societe Generale, said in a note on Tuesday.

Benchmark 10-year notes rose on Tuesday, as did 30-year bonds. Yields on 10-year notes held below the widely eyed 1.6 percent mark, near 1.5591 percent after hitting a session low near the market open of about 1.546 percent.

U.S. Treasurys

The week will continue to be a heavy one for U.S. sovereign bond issuance. The Treasury auctioned $26 billion in at a high yield of 0.750 percent on Monday. It will also auction $28 billion of 7-year notes and $13 billion of 2-year floating-rate notes on Wednesday.

The yield on the German 10-year bund hit a low of -0.161 percent, its lowest level since July 12.

Economic data due from the U.S. on Tuesday include the Case-Shiller home price index and the Conference Board's consumer confidence report for September.

Crude oil futures declined on Tuesday after rallying more than 3 percent on Monday. The volatility comes as major oil-producing countries meet in Algiers amid rumors of a long-awaited OPEC deal to freeze crude production.

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