US Treasuries prices held onto gains on Tuesday after the Treasury sold $35 billion in five-year notes to solid demand, the second of three sales of $96 billion in new coupon-bearing debt this week. The five-year notes sold at a high yield of 1.34 percent, around the same level that they were trading at before the auction.
The sale may have been aided by demand for low-risk Treasuries heading into month-end, when many portfolio managers who use index benchmarks rebalance their funds.
Five-year notes have also benefited from expectations that the Federal Reserve will not raise interest rates for several years to come, even after it ends its bond purchases.
"There has been demand for the five-year in recent months. It's as far out in duration that you can go and feel safe if the Fed was to start the taper," said Lou Brien, market strategist at DRW Trading in Chicago.
The Treasury will sell $29 billion in seven-year notes on Wednesday, the final sale of the week.
Trading volumes are expected to decline heading into week-end, with the bond market closed on Thursday for the Thanksgiving holiday and closing early on Friday.
Benchmark 10-year Treasury notes were last up 9/32 in price to yield 2.70 percent on Tuesday, down from 2.74 percent late on Monday.
Thirty-year bonds rose 18/32 in price to yield 3.79 percent, down from 3.84 percent late on Monday.
Treasuries gained earlier on Tuesday after data showed that consumer confidence unexpectedly slipped in November, with the Conference Board consumer confidence index at its lowest level since April.
Investors are paying close attention to data for any signs on the strength of the economic recovery, which is critical to the timing of when the Fed is likely to begin paring its $85 billion-a-month bond-purchase program.
"Consumer confidence came in significantly weaker than expected. The market was looking for an increase, we got a decrease," said Ian Lyngen, senior government bond strategist at CRT Capital in Stamford, Connecticut.
Housing data came in mixed on Tuesday, with one closely watched housing survey showing that US single-family home prices posted their strongest annualised gain in 7-1/2 years in September, while another showed gains in home prices eased.
"The net read from these data points is that the back up in mortgage rates has stalled the housing market recovery," said Steven Ricchiuto, chief economist at Mizuho Securities USA in New York.
The most anticipated data in the coming weeks will be the payrolls employment report for November, which will be released on December 6.