Treasurys fall on lower demand

NEW YORK (CNNMoney.com) -- Treasury prices continued to fall Monday following tepid auctions last week.

What prices are doing: The benchmark 10-year note fell 17/32 to 97-21/32 and its yield rose to 3.87%. The 30-year bond fell 27/32 to 97-6/32 with a yield of 4.78%. Bond prices and yields move in opposite directions.

The 5-year note fell 13/32 to 99-5/32 with a yield of 2.61%. The 2-year note fell 20/32 to 99-9/32 with a yield of 1.06%.

What's moving the market: Consumer spending and income numbers released by the Commerce Department Monday came in as expected, and weren't major market movers. Personal spending rose for a fifth straight month in February, while personal income was virtually unchanged. Stocks posted modest gains in wake of the news.

Meanwhile, Treasury prices continued to fall, driving yields higher, after government auctions of $118 billion in notes last week saw lackluster demand. Given the flood of Treasurys that the government has issued over the last several months to fund U.S. debt, analysts have been predicting that investors will eventually begin demanding higher yields.

What analysts are saying: Traders were struggling to find buyers for Treasurys and the markets seem poised for higher rates, Kevin Giddis, president of fixed income at Morgan Keegan, wrote in a report to investors Monday.

"The absence of inflation should make the ride slower and more deliberate, but sooner or later, the Fed will act and investors will become more confident on the recovery and seek higher yields elsewhere, like in corporate bonds," he wrote. "When this happens, Treasury yields will rise, up and down the curve, and prices will fall in lockstep."