* U.S. consumer confidence index jumps to 16-year high
* Yield curve flattest since Nov. 9
* U.S. 5-year note auction shows strong central bank demand
(Adds comment, 5-year note auction results, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, March 28 U.S. Treasury debt yields
rose on Tuesday, in generally below-average volume, tracking a
jump in stocks after U.S. consumer confidence surged to a
Yields, which move inversely to prices, hit session highs
following the consumer confidence report and a U.S. five-year
note auction that showed robust demand from foreign central
Lou Brien, market strategist at DRW Trading in Chicago, said
gains in the U.S. stock market and the strong consumer
confidence data turned the corner for Treasury debt yields.
The Conference Board said the consumer confidence index hit
125.6 in March, surpassing expectations for a reading of 114 and
much higher than the reading of 116.1 in February. The March
reading was the highest since December 2000.
"This is an impressive gain ... and a notable disconnect
with 10-year yields under 2.38 percent, but it surely reflects
the ongoing bid for equities," said Ian Lyngen, head of U.S.
rates strategy at BMO Capital Markets in New York.
The consumer confidence data, however, covered the period
before Republicans in the House of Representatives withdrew
their healthcare plan after promising to abolish former
president Barack Obama's 2010 Affordable Care Act.
The healthcare setback has boosted Treasuries' safe-haven
appeal in the last few days as investors worried about how it
would impact the Trump administration's push for an overhaul of
the tax code and other efforts to boost the economy.
The U.S. Treasury's five-year note auction, meanwhile,
turned out favorably, thanks to strong foreign central bank bids
of 68.9 percent. That was up from the prior 58.2 percent, as
well as the average of 61.4 percent.
The note's high yield was 1.950 percent, above the 1.945
percent rate at the bid deadline.
In afternoon trading, benchmark 10-year notes
were down 11/32 in price to yield 2.416 percent, up from 2.375
percent on Monday.
U.S. 30-year bond prices were down 24/32,
yielding 3.017 percent, higher than Monday's 2.98 percent.
U.S. two-year note yields were at 1.301 percent,
up from Monday's 1.267 percent.
The yield gap between shorter-dated and longer-dated
Treasuries shrank on Tuesday, with the spread between the
two-year and 10-year at 111 basis points, its
flattest since the day after the Nov. 8 U.S. elections.
A flat yield curve is often an early warning sign of a
"In my opinion, this flattening of the yield curve will
continue," DRW's Brien said. "There's too much uncertainty as to
what comes next from the administration. I don't see any surge
in inflation that would put the long end higher in a quick way."
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Lisa Von Ahn
and Paul Simao)