U.S. shorter-dated bonds extend losses after auction

NEW YORK (Reuters) - Shorter-dated U.S. Treasury debt prices extended losses on Tuesday after relatively soft demand in a record-large $28 billion five-year note auction.

The bid-to-cover ratio, a gauge of demand, in the auction was 2.06, below the average of 2.15 percent in the 11 previous five-year auctions of 2008.

"People are balking and demanding higher yields," said George Goncalves, chief Treasury/TIPS and agency strategist with Morgan Stanley in New York.

Five-year Treasury notes were trading 5/32 lower in price for a yield of 1.45 percent from 1.42 percent late on Monday, while the benchmark 10-year note was 6/32 higher in price for a yield of 2.16 from 2.18 percent.

(Reporting by Chris Reese and John Parry; Editing by Chizu Nomiyama)