* U.S. to hold $24 billion 3-year note auction
* Stocks wobble ahead of Trump's news conference
* U.S. small business optimism hits 12-year peak
By Richard Leong
NEW YORK, Jan 10 U.S. Treasury yields were
little changed on Tuesday as investors made room for $24 billion
of three-year government notes, which was offset by appetite for
bonds due to a pullback in U.S. stocks.
Bond yields have held in a tight range following last
Friday's jobs data that showed the U.S. labor market continued
to tighten and a tentative pickup in wage growth.
"It's a market that's trying to sell off but it's not
succeeding," said Aaron Kohli, interest rates strategist at BMO
Capital Markets in New York.
The yield on benchmark 10-year Treasuries was
little changed at 2.378 percent after moving in a narrow 3
Two-year yields were flat at 1.194 percent, while
30-year yields edged up 1 basis point to 2.978
In "when-issued" activity, traders expected the latest
three-year Treasury supply to sell at a yield of
1.481 percent, compared with 1.452 percent at the prior
three-year note sale.
Data that showed U.S. small business optimism hit a 12-year
high in December revived the notion that the domestic economy
may pick up steam with possible stimulus programs from the
incoming Trump administration and a Republican-controlled
More spending and investments could result in a swifter pace
of interest rate increases from the Federal Reserve to keep
inflation under control.
Possibility of steep tax cuts and infrastructure spending
has stoked worries about a surge in federal borrowing, traders
and analysts said.
"The market will remain cautious, particularly longer-dated
issues, with concerns about Treasuries issuance which may
accelerate inflation," said Jason Celente, senior portfolio
manager at Insight Investment in New York.
Investors awaited details about possible economic policies
from President-elect Donald Trump who was scheduled for a news
conference on Wednesday.
Wall Street stocks have retreated from their record levels
as traders re-assess whether Trump can deliver the tax cuts and
other economic issues he campaigned on.
The pullback in risk appetite has renewed some demand for
Treasuries since the beginning of the year.
Speculators, however, are betting heavily that U.S. yields
will climb higher in 2017. Fed officials have hinted they would
raise short-term interest rates further after hiking them by a
quarter point in December.
Speculative net shorts in five-year and 10-year Treasury
note futures rose to record levels last week, according to data
from Commodity Futures Trading Commission released on Friday.
(Reporting by Richard Leong; Editing by Meredith Mazzilli)