* U.S. to sell $12 bln 30-year bonds
* Falling oil prices helps long bonds
By Karen Brettell
NEW YORK, Sept 13 U.S. Treasuries were steady on
Tuesday and the yield curve held near its steepest levels in
more than one-month before the government is due to auction $12
billion in long bonds.
A recent backup in yields may help demand for Tuesday's
30-year auction, the final sale of $56 billion in coupon-bearing
supply this week.
"The last few times we had a backup in yields ... the
auctions did reasonably well," said Ian Lyngen, an independent
Treasuries strategist in New York.
Thirty-year yields held just below 2-1/2-month
highs at 2.49 percent on Tuesday. They have jumped from 2.22
percent last Thursday.
Long bonds have underperformed in the past month in line
with a steepening yield curve in Japanese government bonds.
The Bank of Japan is studying options to steepen the yield
curve to help prompt new lending by banks that have been hurt by
low long-term rates.
Thirty-year bonds were helped on Tuesday, however, as oil
prices fell, reducing expectations of future inflation.
"Renewed weakness in the commodity market has been the key
supporter for the long bond," Lyngen said.
The yield curve between five-year notes and 30-year bonds
flattened to 118.70 basis points, after earlier
rising to 119.80 basis points, the steepest since Aug. 5.
Treasuries have stabilized since a dramatic selloff on
Friday, which was sparked by concerns that the European Central
Bank and BOJ will adopt less stimulative policies as they face
fewer options to try to generate growth and inflation.
Dovish comments by Federal Reserve Governor Lael Brainard on
Monday also further reduced expectations that the U.S. central
bank will raise interest rates when it meets next week.
Goldman Sachs on Tuesday further cut its view on the
likelihood of a rate hike next week to just 25 percent from 40
The government had to pay slightly more to sell $20 billion
in 10-year notes on Monday, which sold at a high yield of 1.699
percent, almost a basis point higher than where the debt traded
before the auction.
The auction likely suffered from some demand as it was held
just before Brainard's highly anticipated comments, and in
conjunction with a $24 billion sale of three-year notes.
Retail sales data on Thursday and consumer inflation data on
Friday will next be watched for signs of when the Fed is likely
to next raise rates.
(Editing by Bill Trott)