Treasurys gain ahead of earnings

NEW YORK (CNNMoney.com) -- Prices for U.S. Treasurys rose Monday as the government offered $35 billion in 3-year notes and investors await quarterly reports from major corporations.

What prices are doing: The benchmark 10-year note was up 12/32 to 100-2/32 and its yield fell to 3.02% from 3.04% late Friday. Bond prices and yields move in opposite directions.

The 2-year note was little changed at 99-31/32 with a yield of 0.64%, while the 5-year note gained 4/32 to 10/32 and yielded 1.81%.

The 30-year bond rose 18/32 to 106-13/32 with a yield of 4%.

What's moving the market: The Treasury Department is auctioning $69 billion worth of notes and bonds this week as part of its quarterly refunding.

In addition to Monday's sale of 3-year notes, the U.S. will offer $21 billion in 10-year notes and $13 billion in 30-year bonds.

Meanwhile, investors are bracing for the start of the second-quarter reporting period, which begins after the market closes when Alcoa posts results. Analysts expect the rebound in corporate profits to continue, but the outlook for the rest of the year will be in focus.

What analysts are saying: Analysts at Wrightson ICAP note that the size of Monday's auction is down $1 billion from the previous month and that the Treasury has cut the size of other auctions in recent months.

"We continue to expect auction sizes to fall in the second half of the year, but we may not see cutbacks in each and every intermediate offering every month," the analysts said in a research report.

In addition, the report said foreign accounts purchased only 24% of the previous 3-year sale in June, which was the lowest since last spring.

At the same time, demand from domestic investors has increased. According to Wrightson ICAP, U.S. investors bought 28% of the last 3-year note sale, versus an average of 15% over the past 12 months.