Treasury Department auctions $12 billion of 30-year bonds at a high yield of 2.87%


U.S. government debt prices were slightly higher on Tuesday as investors digested fresh supply into the market.

The Treasury Department auctioned $12 billion in 30-year bonds at a high yield of 2.87 percent on Tuesday.The bid-to-cover ratio, an indicator of demand, was 2.32.

Indirect bidders, which include major central banks, were awarded 63.7 percent, a record high. Direct bidders, which includes domestic money managers, bought 6.7 percent.

The 30-year yield hovered around 2.862 percent after the auction.

Investors also prepared for the Federal Reserve's two-day policy meeting, which kicked off Tuesday. The central bank is due to announce its interest rate decision on Wednesday, though a 0.25 percent hike is widely anticipated.

The yield on the benchmark 10-year Treasury notes, which moves inversely to price, was higher at 2.206 percent.

Markets are also primed for more information on how the Fed will begin the long process of shrinking its balance sheet.

The Fed's balance sheet ballooned to $4.5 trillion as it bought bonds in its quantitative easing program. That was the policy it created to help rescue the economy from the financial crisis and, later, to keep it from falling back into recession.

On the data front, Tuesday will see the auction of $35 billion 4-week bills and $12 billion 30-year bonds.

In oil markets, crude futures seesawed after secondary sources showed OPEC's oil production jumped in May, despite the exporter group agreeing last month to extend its six-month deal to cap output into 2018.

Brent crude traded at around $48.55 a barrel on Tuesday, up 0.54 percent, while U.S. crude was around $46.27 a barrel, up 0.41 percent.