Treasury yields advance

US Treasury yields rose on Tuesday, as equities bounced amid positive developments in trade negotiations between the United States and China. Yields on US 30-year bonds, which had been diverging from the rest of the market the last few sessions, turned higher in the afternoon after earlier sliding to a three-month low.
That still flattened the 5-year and 30-year yield curve on Tuesday, after two sessions of steepening last week. The flatter yield curve reflects persistent worries about geopolitical risks, analysts said.
But positive trade headlines have eased some of the global jitters for now, analysts said.
On Tuesday, China and the United States discussed a road map for the next stage of their trade talks during a telephone call between Chinese Vice Premier Liu He, US Treasury Secretary Steven Mnuchin, and US Trade Representative Robert Lighthizer.
A US Treasury spokesman confirmed the call with Liu took place, but offered no further details.
Yields, however, came off their highs after US President Donald Trump openly sparred about government funding with the top two Democratic lawmakers during an Oval Office meeting on Tuesday.
"Debt investors trade with one eye on stocks, and almost everyone wishes they averted their eyes rather than tune in the televised meeting between the president and Democrat congressional leaders over funding priorities," said Jim Vogel, interest rate strategist at FTN Financial in Memphis Tennessee.
"The exchange between the leaders dampened market enthusiasm about apparent trade progress with China," he added.
US 3-year yields, meanwhile, edged higher after a well-received auction of the notes earlier in the session.
The 3-year offering was priced at 2.748 percent, compared with 2.750 percent before the bid deadline. That was the lowest yield for this note at an auction since July, Treasury data showed.
Bids totaled nearly $98.5 billion for a 2.59 bid-to-cover ratio, a gauge of demand, slightly up from last month's 2.54, even with the $1 billion increase in volume.
In late trading, US 10-year note yields edged up to 2.888 percent from 2.856 percent late on Monday.
US 30-year bond yields also gained to 3.133 percent from 3.129 percent on Monday.
On the short end of the curve, US 2-year yields inched up to 2.780 percent, compared with Monday's 2.727 percent.
Investors are now looking to the $24 billion US 10-year note auction on Wednesday where some expect decent demand. US data showing an unexpected rise in producer prices last month also nudged yields higher. The producer price index for final demand edged up 0.1 percent last month after jumping 0.6 percent in October. Economists polled by Reuters had forecast PPI to be unchanged in November.