US Treasurys mixed after 2-year note auction

Traders in the 10-year bond options pit at the Chicago Board of Trade signal orders.
Frank Polich | Reuters

U.S. government debt prices were mixed on Tuesday as investors eyed fresh economic data after President's Day and awaited the 2-year note auction.

The Treasury Department auctioned $26 billion in 2-year notes at a high yield of 1.23 percent. The bid-to-cover ratio, an indicator of demand, was 2.82. The demand on the 2-year is the highest since August, well above a recent average of 2.67.

Indirect bidders, which include major central banks, were awarded 49.8 percent. Direct bidders, which includes domestic money managers, bought 20.1 percent.

The yield on the 2-year note was higher around 1.917 percent.

The yield on the benchmark 10-year Treasury notes, which moves inversely to price, was lower at around 2.429 percent, while the yield on the 30-year Treasury bond was also lower at 3.039 percent.


On the data front, Tuesday will see flash Markit services PMI (Purchasing Managers' Index) for February released at 9.45 a.m ET.

In oil markets, U.S. crude futures rose for a second consecutive day on Tuesday with Reuters reporting data showing hedge funds are betting big across oil markets after OPEC production cuts.

Brent crude traded at around $56.85 a barrel on Tuesday, up 1.19 percent, while U.S. crude was around $54.32 a barrel, up 1.72 percent.

Overseas, the upbeat European PMIs emboldened the bearish case for French bonds, which have been under mounting pressure in recent weeks as concerns surrounding the April-May presidential election have intensified.

Investors have been preoccupied with the possibility that far-right and anti-euro candidate Marine Le Pen might win.

The premium investors demand to hold French bonds instead of German debt eased slightly on Tuesday from Monday's near four-year high. The spread was last at 78 basis points, after widening out to as much as 85 basis points on Monday.

—CNBC's Luqman Adeniyi and Reuters contributed to this report.