NEW YORK (Reuters) – U.S. Treasuries showed modest losses on Tuesday as traders trimmed prices to entice buyers to the Treasury’s five-year note auction later in the day.

The Treasury will sell $35.0 billion in five-year notes at 1 p.m. ET, the second of the Treasury’s three auctions of coupons this week, totaling $99 billion.

The government sold two-year notes on Monday and will sell seven-years on Wednesday. The auctions settle on March 31.

While the two-year auction produced a “tail,” meaning the auction yield was higher than the simultaneous open-market yield, traders do not expect the phenomenon to be repeated at the five-year note sale.

“With the extreme market volatility, today’s auction is a wild card,” said Justin Lederer, fixed-income rates strategist at Cantor Fitzgerald in New York.

In when-issued trade, the five-year notes to be sold at the Tuesday auction yielded 2.245 percent. Traders have said a yield of 2.25 percent could attract good demand.

“On one hand, there is a risk that many will not bid as aggressively; setups are not as strong, and many investors see the Fed’s current accommodative policies close to the finish line,” Lederer said, noting that Cantor does not expect the first Fed interest rate hike until late 2012.

NEW YORK, March 28 (Reuters) – U.S. Treasuries erased most losses on Monday just ahead of a Treasury two-year note sale where higher yields were expected to draw solid demand.

Prospective supply this week and some recent hawkish comments from Federal Reserve officials weighed on bond prices early in the session.

But anticipation of good demand for the Treasury’s $35 billion in two-year notes at 1 p.m. (1700 GMT) led to most of those losses being erased. The long-dated sector of the yield curve, which is getting no new supply this week, slightly outperformed the middle of the curve.

“Treasury auctions coming through their 1 p.m. level has been the theme of 2011, with nine out the last nine coming on or through their 1 p.m. yield levels,” said Justin Lederer, fixed-income rates strategist at Cantor Fitzgerald, noting the significant backup in rates since the last two-year note sale.

Benchmark 10-year Treasury notes US10YT=RR, down 8/32 earlier, were up 1/32 at midday to yield 3.44 percent.

In when-issued trade, the two-year notes to be sold at 1 p.m. yielded 0.803 percent.

“Yen intervention proceeds should be reflected in indirect bidder participation, which was 31.3 percent last month and has averaged 33 percent over the past six months,” Lederer said.

NEW YORK, March 28 (Reuters) – U.S. Treasuries slipped on Monday as traders trimmed positions to make way for new supply and looked ahead to mid-year when the Federal Reserve’s program of buying Treasuries is set to end.

Government data showing U.S. personal spending and inflation accelerated in February also weighed on prices.

The market prepared for two-, five- and seven-year Treasury note auctions, a total of $99 billion in supply, starting with Monday’s $35 billion two-year sale at 1 p.m. EDT (1700 GMT).

Benchmark 10-year Treasury notes US10YT=RR were down 8/32, their yields up at 3.47 percent from 3.44 percent.

“We sold off at the opening in Tokyo and there was a small amount of additional selling when the data showed consumers were out there spending last month,” said Chris Rupkey, chief financial economist at Bank of Tokyo/Mitsubishi UFJ.

Lower oil prices also implied less risk to the global growth outlook, “and that’s a negative for bonds,” he added.

On Wall Street, stock prices .DJI.IXIC.SPX rose.

NEW YORK, March 25 (Reuters) – Short-term U.S. interest rates held just above zero on Friday, anchored by the Federal Reserve’s plan to keep those rates low for an extended period.

The U.S. central bank engineered its low short-term interest-rate policy to encourage investors to invest in longer-term securities and riskier assets and to prompt banks to lend. The low rates were used as an antidote to the effects of the financial crisis and to spur economic growth.

The Fed’s policy diminishes the incentive to remain in short-term securities.

“There doesn’t seem to be much opportunity there,” said Michael J. Materasso, head of fixed-income at San Mateo, California-based Franklin Templeton, with more than $280.9 billion in fixed-income assets under management. “Short-term rates are very low and very compressed.”

Short U.S. rates are unlikely to budge until the Fed begins to unwind some of its monetary accommodation, Materasso said.

But depending on the extent of the unwinding, the yield curve could get even steeper, he said.

If the Fed takes a lot of time to repo out the assets it has acquired as part of the two phases of quantitative easing – before it starts to raise the federal funds rate — and the economy starts to do well, it risks raising inflation expectations, Materasso said. Then long-term rates could rise relative to short rates.

NEW YORK, March 24 (Reuters) – The U.S. commercial paper market expanded in the latest week, pointing to growing credit demand to fund payrolls and inventories in the economy, Federal Reserve data showed on Thursday.

The size of the U.S. commercial paper market rose $4 billion on a seasonally adjusted basis to $1.08 trillion outstanding in the week ended March 23 from a seasonally adjusted $1.076 trillion outstanding a week earlier.

The size of the market without seasonal adjustments rose $7.7 billion to $1.135 trillion.

“There’s plenty of demand out there and funding levels are attractive, and that’s been true for months,” said Thomas Simons, money market economist and vice president, fixed-income, at Jefferies & Co. in New York.

Meanwhile, short-term U.S. rates remained hovered just above zero, anchored by the Federal Reserve’s policy of keeping the overnight fed funds rate near zero for an extended period.

In London, money market indicators showed a growing conviction that the ECB would follow through with its signalled interest rate hike in April, but uncertainty over the pace of further rises looked set to persist.

Policymakers insist that the central bank’s intention to tighten policy in response to rising prices remains unmoved by the threat of slower global growth stemming from Japan’s earthquake and conflict in oil-producing regions.

NEW YORK, March 23 (Reuters) – U.S. Treasuries finished slightly lower on Wednesday on higher stock prices but they still drew a safe-haven bid from turmoil in the Middle East and North Africa as well as fears Portugal would seek a bailout.

Portugal’s parliament rejected the minority Socialist government’s austerity measures in a vote seen as likely to cause the administration’s collapse. Prime Minister Jose Socrates had said he would resign if the plan was not approved and Portugal would probably be forced to request foreign aid.

“The fate of the U.S. bond market for the moment is not in our hands. We sit here mesmerized by developments overseas and from a price perspective remain very reactive to the headlines,” said David Ader, head of government bond strategy at CRT Capital in Stamford, Connecticut.

Black smoke again rose from Japan’s Fukushima nuclear power plant, and the government warned that infants should not be given tap water because of radiation levels. [ID:nL3E7EM3EM]

Analysts said it remained to be seen whether the Japanese will eventually sell Treasuries to finance rebuilding after the devastating earthquake and tsunami.

“As far as the potential for insurance payouts, that is still an open question as to how much that will be, and how much that will require repatriation of yen and therefore potential Treasuries selling longer-term as a result,” said John Canavan, market strategist at Stone & McCarthy Research Associates in Princeton, New Jersey.

Bonds expanded early gains on news that U.S. sales of new homes fell sharply in February. But gains were erased after the Federal Reserve bought $7.56 billion of Treasuries maturing May 2018 through February 2015 near 11 a.m. (1500 GMT).

NEW YORK, March 22 (Reuters) – The U.S. Treasury’s four-week bill auction drew solid bids in a maturity likely to see less issuance, and less liquidity, in coming weeks.

The $40 billion sale stopped right on the bidside of the when-issued bill at the deadline for bids at 7.5 basis points.

While weaker than last week’s auction, the 4.14 ratio of bids offered over those accepted was close to the four-week moving average, observed Thomas Simons, money market economist at Jefferies & Co. in New York.

The portion of the issue captured by dealers totaled 71.1 percent, the largest since late January. The allocation to indirect bidders was 10.8 percent while the direct bid took 18.1 percent of the issue, the largest share since Dec. 21.

“Yields had been declining in recent weeks due to supply fundamentals though they’ve backed up a bit since the last auction,” Simons said.

The Treasury’s decision to sell its mortgage-backed securities holdings will reduce financing requirements, needs that already will be reduced by taxes due Monday, Aug. 18.

Additionally, two cash management bills maturing in late April will reduce supply by another $50 billion, Simons said.

NEW YORK, March 21 (Reuters) – Low yields have not kept dealers from bidding on short-term U.S. bills because supplies of those securities are likely to shrink in coming months.

On Monday, the Treasury’s three- US3MT=RR and six-month US6MT=RR bill auctions stopped right on the bidside at 9.5 and 15 basis points, respectively.

Dealers took 67.1 percent of the three-month sale, large by historical standards.

The seasonal supply peak “is likely motivating dealers to bid for large lots of the bills despite the low yields,” said Thomas Simons, money market economist at Jefferies & Co.

For the three-month sale, the ratio of bids received over those accepted improved to 4.54 from 4.38 the previous week.

The ratio of bids received over those accepted in the six-month bill auction was 4.61, marginally larger than last week’s 4.51.

“Bills appear to have hit their seasonal supply peak,” and several factors point to less supply ahead, Simons said.

NEW YORK, March 10 (Reuters) – A safe-haven bid tied to euro zone debt concerns and a rise in new U.S. jobless claims lifted U.S. Treasuries prices on Thursday, even as dealers prepared to underwrite the Treasury’s 30-year bond auction.

A Moody’s Investors Corp downgrade of Spain’s debt rating shifted the spotlight to the debt issues facing peripheral euro zone nations, complexities that have compelled countries like Portugal to offer high yields to sell their bonds.

A brief security alert at London’s Heathrow Airport after a man threatened to blow himself up also helped boost U.S. government bond prices in early dealings, traders said.

Meanwhile, oil prices retreated, but remained near recent highs, as escalating violence in Libya aroused fears that the country’s oil infrastructure could suffer lasting damage.

“The market (is) focusing on world events more than anything and that is the unrest in the Middle East, oil prices and gold prices,” said Charles Comiskey, head of Treasury trading at Bank of Nova Scotia in New York.

30-YEAR BOND AUCTION IMMINENT

The item most immediately on the market’s radar was the Treasury’s $13 billion auction at 1 p.m. (1800 GMT), the last of the Treasury’s three coupon auctions this week.

NEW YORK, March 4 (Reuters) – U.S. Treasuries prices rallied on Friday as moderate U.S. job growth in February, stock market losses and higher oil prices whetted investors’ appetite for safe-haven government debt ahead of the weekend.

More gradual U.S. employment growth in February than some in the market had expected helped Treasuries reverse some of the previous day’s losses incurred on views that job growth might be higher than forecast.

Traders cited buying from Middle East investors amid increased strife in oil-producing Libya as Libyan security forces fired on protesters in Tripoli and clashed with rebels near the major oil terminal of Ras Lanuf. [nTOPMEAST]

“A lot of the day’s advance was short-covering as people realized the employment numbers were not as bad as expected,” said John Spinello, senior vice president and chief fixed-income technical strategist at Jefferies in New York.

“A 3.50 percent 10-year yield is not a great buy with supply coming, but there are people who feel the economy will struggle with high gas prices so that’s one of the variables in the equation.”

Benchmark 10-year notes US10YT=RR rose 18/32, their yields easing to 3.49 percent from 3.56 percent on Thursday.

Two major stock indexes .SPX.DJI each fell more than 1 percent as U.S. crude oil prices jumped to their highest since September 2008.