* U.S. $24 billion 3-year note sale fetches solid demand
* Investors await possible details on Trump's policies
* U.S. small business optimism hits 12-year peak
(Updates market action, adds table)
By Richard Leong
NEW YORK, Jan 10 U.S. Treasury yields held
steady on Tuesday as solid investor demand for $24 billion of
three-year government notes offset mild selling in bonds after
Wall Street stock prices pared early losses.
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 rate strategist at BMO
Capital Markets in New York.
The yield on benchmark 10-year Treasuries was
little changed at 2.381 percent as it bounced in a narrow 3
Two-year yields were flat at 1.194 percent, while
30-year yields nudged up 0.4 basis point to 2.972
The U.S. Treasury Department sold the latest three-year debt
issue, part of this week's $56 billion in
longer-dated Treasury supply, at a yield of 1.472 percent, the
highest since April 2010.
Indirect bidders including fund managers and foreign central
banks bought 54.6 percent of the three-year supply, their
biggest share since September.
"The strength of the indirect bid typically tends to trade
the strength of investment fund demand," John Canavan, market
strategist at Stone & McCarthy Research Associates, wrote in a
research note on the three-year auction.
The Treasury will sell $20 billion in 10-year notes
on Wednesday and $12 billion in 30-year bonds
Investors' enthusiasm in Treasuries, which have retraced
some of its heavy losses in late 2016, was tempered by data on
Monday that showed U.S. small business optimism hit a 12-year
high in December and a pickup in job openings.
Possibility of steep tax cuts and infrastructure spending
under a Trump administration and a Republican-controlled
Congress has stoked worries about a surge in inflation and
federal borrowing, investors said.
Investors awaited details about possible economic policies
from President-elect Donald Trump who was scheduled for a news
conference on Wednesday.
Anxiety whether Trump could deliver on economic issues he
pledged during his campaign has led to a pullback in stock
prices in recent days.
In late Tuesday trading, Wall Street shares bounced back
from their initial lows with the Nasdaq hitting a record
intraday high, weighing on longer-dated Treasuries.
Treasuries demand has also been kept in check by this week's
corporate bond supply with companies seen issuing $25 billion to
$30 billion in the investment-grade sector, according to IFR, a
Thomson Reuters unit.
January 10 Tuesday 3:22PM New York / 2022 GMT
Price Current Net
Yield % Change
Three-month bills 0.5125 0.5203 0.000
Six-month bills 0.5925 0.6025 0.002
Two-year note 100-28/256 1.1936 0.000
Three-year note 99-200/256 1.4515 -0.002
Five-year note 100-144/256 1.8809 0.000
Seven-year note 100-108/256 2.1844 0.002
10-year note 96-172/256 2.3812 0.005
30-year bond 98-20/256 2.9725 0.005
DOLLAR SWAP SPREADS
Last (bps) Net
U.S. 2-year dollar swap 28.00 0.00
U.S. 3-year dollar swap 22.00 0.75
U.S. 5-year dollar swap 4.00 0.25
U.S. 10-year dollar swap -13.25 0.25
U.S. 30-year dollar swap -49.25 0.50
(Reporting by Richard Leong; Editing by Meredith Mazzilli and