NEW YORK (CNNMoney.com) -- Treasury prices rose Tuesday, pushing the 10-year yield down from the 4% highpoint it reached for the first time in 18 months. The government is auctioning off $82 billion in U.S. debt this week and so far, investors have responded with solid demand.
What prices are doing: The benchmark 10-year note rose 3/32 to 97-3/32, and its yield dipped to 3.96%, from 4% the day before. Investors have been looking forward to the yield reaching the 4% mark ever since it dropped from that level in October 2008, the height of the financial crisis.
Bond prices and yields have a converse relationship; when prices rise, yields fall.
In morning trading Tuesday, the 30-year bond rose 1/32 to 96-7/32, and its yield fell to 4.84%. The 2-year note rose was flat at 99-8/32 and yielded 1.14%. The 5-year note rose 23/32 to 99 and yielded 2.71%.
What's moving the market: Tuesday marked the first normal trading day after a long holiday weekend. Bonds traded in a shortened session Friday for the Good Friday holiday, and markets in Europe and Hong Kong were closed for Easter Monday.
Light trading volume from the holidays and a slew of upbeat economic reports on both Friday and Monday made it easier for bullish bond investors to push the 10-year yield up to the 4% mark. Broader trading participation on Tuesday and renewed concerns about Greece's financial aid package brought the 10-year's yield back down.
In its second auction of the week, the Treasury Department issued $40 billion in 3-year notes Tuesday. Investors submitted bids totaling nearly $124 billion. The bid-to-cover ratio was 3.1, meaning the auction showed solid demand. A sale of $8 billion in 10-year Treasury Inflation-Protected Securities, or TIPS, on Monday was also well-received.
The auctions this week also include $21 billion in reopened 10-year notes on Wednesday and $13 billion in existing 30-year bonds Thursday. Treasury prices typically fall the day before major auctions, in anticipation of the new supply issue.
What analysts are saying: As yields rose on upbeat economic news in the last few trading days, the better rates have lured in more investors.
As a result, Tuesday was a high volume day for Treasurys, said Ron Mark, a fixed-income trader with BMO Capital Markets. But analysts are still looking ahead to the 10-year and 30-year auctions before they'll be prepared to define any movement in the markets as a significant trend, he said.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.30%||4.25%|
|15 yr fixed||3.29%||3.32%|
|30 yr refi||4.27%||4.20%|
|15 yr refi||3.26%||3.24%|
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