U.S. Yields Rise as 2-year Note Sale Sees Average Demand

Treasury yields rose on Monday after the government’s sale of two-year notes, the first part of this week’s $90 billion in fixed-rate U.S. debt supply.

The Treasury Department auctioned $26 billion in two-year notes at a high yield of 0.540 percent—the lowest since January. The bid-to-cover ratio, an indicator of demand, was the weakest since December at 3.30. That was a bit light of the recent average of 3.42.  In the “when-issued” sector, traders had expected the notes due in April 2017 to fetch a yield of 0.5480 percent.

Direct bidders, which includes domestic money managers, brought 15 percent, which was unchanged from the recent average. Indirect bidders, which include major central banks, were awarded 38 percent, also unchanged from the recent average.