Treasurys higher after auction
Prices for U.S. debt hold gains after the government sells $37 billion worth of 3-year notes.
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NEW YORK (CNNMoney.com) -- Treasury prices held earlier gains Tuesday after the government saw strong demand for its sale of $37 billion worth of 3-year notes.
The Treasury said it received $107.7 billion worth of bids for the $37 billion worth of notes sold. That made for a bid-to-cover ratio of 2.89, well above the long-term average of 2.56 for the securities.
Indirect bidders, a category that includes foreign central banks, bought more than 62% of the notes.
Tuesday's auction was the first of three offerings this week totaling $75 billion. The U.S. will auction $23 billion in 10-year notes Wednesday and $15 billion in 30-year bonds on Thursday as part of its quarterly refunding.
The record offering is the latest in a string of large debt sales the government has held monthly as it seeks to fund a growing deficit and spur the ailing economy out of recession.
The onslaught of new issues has raised concern that demand for Treasurys is wearing thin. Last month, auctions of 2-year and 5-year notes received lower than average bid-to-cover ratios, which reflect the market's appetite for the securities.
While Tuesday's auction was well received, analysts say Wednesday's 10-year and Thursday's 30-year auctions could encounter some resistance.
"The longer dated securities will be what the market is going to be focused on," said Bill Larkin, a fixed-income trader at Cabot Money Management.
Meanwhile, stocks tumbled Tuesday as investors responded to a worse-than-expected reading on wholesale inventories and an ongoing meeting of the Federal Reserve.
Analysts expect the central bank to hold interest rates steady near zero percent, but investors will pay close attention to the Fed's statement for details on its outlook and its plan to purchase $300 billion worth of U.S. debt, which is due to wind down in September.
An announcement is expected at 2:15 p.m. ET Wednesday.
Separately, the Fed purchased $2.7 billion worth of Treasurys maturing between 2026 and 2039 on Tuesday. The aim is to keep interest rates lower on certain consumer loans such as mortgages and to boost the economy.
Bond prices: The benchmark 10-year note was up 27/32 to 95-17/32. Its yield fell to 3.67% from 3.77% late Monday. Bond prices and yields move in opposite directions.
The 30-year bond gained 1-19/32 to 96-30/32 and its yield eased to 4.43%.
The 2-year note edged up 3/32 to 99-18/32. Its yield was 1.16%.
The yield on the 3-month Treasury bill was 0.18%. 
