(Adds quote, updates prices)
* Yields rise to three-week highs as German debt weakens
* Corporate supply, short resetting weighs on Treasuries
* Fed buys $1.87 bln notes due 2020, 2021
By Karen Brettell
NEW YORK, June 3 U.S. Treasuries yields rose to
their highest in three weeks on Tuesday as investors reset bets
that yields are likely to climb after they fell to 11-month lows
last week and as German government debt weakened.
Yields have risen this week after month-end buying from last
U.S. bond yields rose with German bund yields on Tuesday
after euro zone inflation data was in line with revised
expectations, prompting some in the market who had expected an
even weaker number to book profits after a recent rally.
Investors have also covered bets that yields would rise in
recent weeks, which helped to push them lower. But traders said
those bets were being reset, which is put pressure on the bonds
and sent yields higher again.
"I think the short base is building again," said Tom Tucci,
head of Treasuries trading at CIBC in New York.
The difference between the number of investors who said they
are bearish on U.S. long-dated Treasuries exceeded those who are
bullish grew to its biggest in eight years, according to a J.P.
Morgan survey released on Tuesday.
Traders are preparing for a busy second half of the week,
with the European Central Bank expected to cut interest rates
and announce other measures to stimulate growth in the region
when it meets on Thursday.
At the same time, strong corporate debt issuance is reducing
demand for Treasuries.
"Yesterday there was a large amount of corporate issuance
that will continue into the end of the week. That is weighing on
prices, and the European market is staying offered rather than
bid into the ECB," Tucci said.
Benchmark 10-year notes were last down 10/32 in
price to yield 2.568 percent, after reaching 2.575 percent
earlier on Tuesday, the highest since May 14. Thirty-year bonds
fell 19/32 in price to yield 3.401 percent after
rising as high as 3.415 percent, the highest in a week.
The U.S. jobs report for May is due on Friday and is
expected to show that employers added 218,000 people to
payrolls, according to the median estimate of 105 economists
polled by Reuters.
"The past 3 months have seen Treasury yields move higher
into payrolls and this week is shaping up the same way," said
Richard Gilhooly, an interest rate strategist at TD Securities
in New York.
The Federal Reserve bought $1.87 billion in notes due in
2020 and 2021 on Tuesday as part of its ongoing purchase
(Reporting by Karen Brettell; Editing by James Dalgleish and