* Bond prices roughly unchanged
* Treasury to sell $30 bln in 3-year notes
* U.S. wholesale inventories rose in Jan
By Sam Forgione
NEW YORK, March 11 U.S. Treasuries traded mostly
flat for a second straight day on Tuesday ahead of the U.S.
government's auction of three-year Treasury notes, the first of
three debt auctions this week.
The Treasury will sell $30 billion in three-year notes on
Tuesday, marking the first round of this week's $64 billion in
total new supply. The Treasury will sell $21 billion in 10-year
notes on Wednesday and $13 billion in 30-year bonds on Thursday.
"The auctions are the main event in Treasury space," said
Ian Lyngen, a senior government bond strategist at CRT Capital
in Stamford, Connecticut, in a research note.
Traders have said that the auctions will likely attract
buyers after last week's drop in Treasuries prices.
The yield on the benchmark 10-year U.S. Treasury note rose
18 basis points to 2.79 percent last week after a calming of
geopolitical tensions in Russia and Ukraine and
stronger-than-expected U.S. jobs data triggered selling of
The 10-year yield hit 2.82 percent on Friday, its highest
level in six weeks. Bond yields move inversely to their prices.
While remaining mostly flat, benchmark Treasuries prices
edged lower on Tuesday after the release of Commerce Department
data showing U.S. wholesale inventories rose more than expected
in January, though sales posted their largest decline in nearly
The rise in wholesale inventories could hint at more
positive U.S. gross domestic product growth for the first
quarter, said Vishal Khanduja, fixed income portfolio manager at
Calvert Investments in Bethesda, Maryland.
The 10-year U.S. Treasury note last traded down
2/32 in price to yield 2.793 percent, down slightly in price
from late Monday, when the yield was at 2.784 percent.
Prices have remained stable despite concerns surrounding
Russia and Ukraine and recent data showing China's exports
unexpectedly tumbled 18 percent year-on-year in February,
swinging the trade balance into deficit and adding to fears of a
slowdown in the world's No. 2 economy.
Ousted leader Viktor Yanukovich said on Tuesday he remained
Ukraine's legitimate president and commander-in-chief, saying he
would return to Kiev and appealing to the armed forces to defy
any "criminal orders" handed down by his foes.
While their impact on the bond market remained subdued on
Tuesday, weakness in China and tensions over Ukraine and Russia
could spur safe-haven bids for Treasuries in the near-term.
"We might see some market disruptions from these two
issues," said Khanduja of Calvert. He said, however, that the
10-year Treasury yield will likely stay within a range of
2.70-2.80 percent this week.
The U.S. Federal Reserve bought $1.15 billion in Treasuries
maturing between Feb. 2036 and Aug. 2043 on Tuesday, which had a
muted impact on Treasuries prices.
The 30-year U.S. Treasury bond last traded down
1/32 in price to yield 3.73 percent.