LONDON, April 10 U.S. bonds weakened on Wednesday, pushing T-note yields further away from last week's four-month lows, as investors made room in their books for the 10-year paper due to be auctioned later in the day.
The Treasury plans to sell $21 billion in 10-year notes on Wednesday and $13 billion in 30-year bonds on Thursday.
While supply pressure was expected to weigh on prices near-term, analysts expected U.S. Treasuries to resume last week's rally which followed the Bank of Japan's announcement of plans for an unprecedented $1.4 trillion stimulus plan.
Investors speculate that cash from Japan may spill over into other regions in search of higher yields and assets denominated in other currencies than the rapidly-weakening yen.
U.S. T-note yields were 1.9 basis points higher on the day at 1.7708 percent, compared with a four-month low of 1.667 percent that was hit last week on the back also of a weak U.S. jobs report .
"We are getting a bit cheaper today because we have a 10-year (auction) coming up," one trader said. "I think we can sell a bit more till 1.80 (percent in 10-year yields)."
"A lot of people jumped last week on Treasuries anticipating Japanese buying. It was maybe too soon, but it doesn't mean it was wrong. I would like to get long after the auctions."
T-note futures were 7/32 lower at 132-19/32.
Tomohisa Fujiki, interest rate strategist for BNP Paribas in Tokyo, expected 10-year yields to move in a range of about 1.6 percent to 1.85 percent for the rest of April.
"Such hope, or concern, that Japanese players might buy (Treasuries) seems unlikely to disappear soon," he said.