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US Treasury yields higher after economic data, 2-year note sale

Bond traders at CME Group
Getty Images

U.S. government debt prices were lower on Tuesday as investors digested a batch of economic data and a Treasury Department sale.

The department auctioned $26 billion in two-year notes at a high yield of 1.21 percent on Tuesday. The bid-to-cover ratio, an indicator of demand, was 2.68, above a recent average of 2.66.

Indirect bidders, which include major central banks, were awarded 48.8 percent, above a 10-auction average of 41 percent. Direct bidders, which includes domestic money managers, bought 9.3 percent, well be low an average of 16 percent.

The two-year note yield traded around 1.19 percent following the sale.



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 yield on the benchmark 10-year Treasury notes, which moves inversely to price, was higher at around 2.47 percent, while the yield on the 30-year Treasury bond was also higher at 3.05 percent.

In economic news, the IHS Markit Manufacturing PMI for January rose to 55.1, from 54.3 in December. Existing home sales fell 2.8 percent in December. Investors also looked ahead to a two-year note Treasury auction of $26 billion.

"Bottom line, from here we need to see this business optimism translate into actual improvements in economic growth," said Peter Boockvar, chief market analyst at The Lindsey Group, said in a note. "On Friday we'll see November durable goods orders. Money where their mouth is? Hopefully."

In oil markets, prices moved higher on Tuesday after evidence that OPEC and other oil exporters would commit to reducing production however an increase in drilling in the U.S. could cap further gains.

Brent crude traded at around $55.49 a barrel on Tuesday, up 0.47 percent, while U.S. crude was around $53.27 a barrel, up 0.99 percent.