(Recasts first paragraph, adds quote)
By Richard Leong
NEW YORK Dec 12 Investor demand was cool for
auctions of $44 billion worth of longer-dated U.S. Treasuries on
Monday, signaling the reluctance of the market to embrace bonds
after U.S. President-elect Donald Trump's Nov. 8 election
Bidding for $24 billion of three-year debt and $20 billion
of 10-year notes marked their weakest levels in more than seven
years, resulting in yields that were higher than traders had
expected, Treasury data showed.
"Neither the three-year and 10-year auctions went
particularly went," said John Canavan, market strategist at
Stone & McCarthy Research Associates in Princeton, New Jersey.
The three-year and 10-year Treasury auctions came before the
Federal Reserve's two-day policy meeting this week. Traders
expect the U.S. central bank to raise interest rates by a
quarter percentage point to a range of 0.50 percent to 0.75
The Treasury will sell $12 billion in 30-year bonds at 1
p.m. (1800 GM) on Tuesday.
Some analysts had expected a rebound in demand for Monday's
Treasury supply after the chilly reception shortly after last
month's U.S. election.
"There are definitely concerns about buyside demand,"
Last month's bond market rout stemmed from worries about
faster inflation and a surge in government borrowing under a
Treasury data on Monday showed a slight uptick in purchases
by fund managers, foreign central banks and other indirect
bidders at the 10-year note sale, but their purchases at the
three-year auction fell to their lowest in 10 months.
The Treasury market brushed off Monday's lackluster
auctions, with 10-year yields retreating further from their
earlier peaks last seen in September 2014.
"We expect more of a consolidation in this range rather than
higher yields," said Larry Dyer, U.S. fixed income strategist at
HSBC Securities (USA) Inc. in New York.
Stone & McCarthy's Canavan, however, said it was too early
to judge whether the worse stretch for the bond market since
2013 is over. "I wouldn't read too much into it at this point."
On the open market, the 10-year Treasury yield
was up 2 basis points at 2.482 percent in late U.S. trading
after hitting 2.528 percent, which was the highest level since
September 2014, according to Reuters data.
The three-year yield was marginally lower at
1.401 percent, receding from an earlier peak of 1.457 percent,
which was its highest level in over a week.
(Reporting by Richard Leong; Editing by Meredith Mazzilli and