Federal borrowing has grown since March in the aftermath of a massive tax cut in December and a two-year spending deal in February. However, the government's increasing reliance on IOUs to finance its spending and debt obligations has yet to hurt demand for its securities.
"Supply has created its own demand. There has not been a problem," said Don Ellenberger, head of multi-sector strategies at Federated Investors in Pittsburgh. "At what point that will break the camel's back? We just don't know."
This week's debt sales are expected to refund $38.2 billion investors on maturing debt and to raise $39.8 billion in new cash for the government.
The US Treasury Department will sell $34 billion in three-year notes on Tuesday; $26 billion in 10-year debt on Wednesday and $18 billion in 30-year bonds on Thursday.
Fund managers have loaded up on Treasuries as their yields have ticked up, while speculators have accumulated a record amount of bets that US government debt will lose their value.
Speculative net shorts on US five-year and 10-year Treasury futures reached all-time peaks last week, according to Commitments of Traders data from the Commodity Futures Trading Commission released on Friday.
At 9:46 a.m. (1346 GMT), the benchmark 10-year Treasury yield slipped nearly 2 basis points to 2.934 percent. The 10-year yield has retreated after breaking above 3 percent last week for the first time since late June, following a mixed July payrolls jobs report.
The decline in longer-dated Treasury yields flattened the yield curve modestly, narrowing the gap between five-year and 30-year yields to 27.00 basis points.
The yield curve held above levels in July, when it was at its flattest in over a decade.
US two-year yield was at 2.645 percent, hovering at its highest in 10 years on expectations the Federal Reserve would raise key overnight borrowing costs at its Sept. 25-26 policy meeting due to a tight labor market and signs of inflation moving towards its 2-percent goal.
"There's not much that would dissuade them from moving in September," Ellenberger said.