* Long maturities show modest gains
* First of three Treasury auctions due Tuesday
* Fed chair talks to Congress later in week
By Michael Connor
NEW YORK, May 6 Prices of U.S. Treasuries inched
upwards on Tuesday as bond traders looked ahead to government
auctions of $69 billion in new debt and potentially
market-moving congressional testimony by Federal Reserve Chair
After small losses in earlier overseas trading, prices of
10-year notes were up 2/32 in New York, yielding
2.6041 percent. On Friday, the issue yielded as little as 2.57
percent, a three-month trough.
U.S. 30-year bond yields stood at 3.398 percent,
reflecting a price rise of 6/32. Shorter Treasury maturities
were flat or little changed.
"We're having a little mini rally now but it's hard to see
a narrative based on fundamentals when Yellen will be the topic
of discussion for everyone," said Michael Cloherty, head of U.S.
interest rate strategy at RBC Securities.
Yellen was due to speak at congressional hearings on
Wednesday and Thursday. Though widely expected by analysts to
maintain a dovish policy stance, she will be closely watched for
hints on raising interest rates, which many forecasters see
starting in 2015.
Cloherty said he wanted details about how Fed policymakers
will decide on tightening. "It's been a while since we had
that," he said.
Trading in Treasuries was also shaped by Tuesday's scheduled
Treasury Department auction of $29 billion of 3-year bills,
which is the first of three large deals set for this week. A
10-year note auction for $24 billion is scheduled for Wednesday
and a $16 billion auction of 30-year bonds is due on Thursday.
"Normally you'd expect things to cheapen up a bit" ahead of
auctions, Cloherty said. "But we haven't seen much in the way of
concessions. Today's is the easiest of the three. And, if we
don't get much in the way of concession, things could get
sloppier for the 10- and 30-year."
Treasuries reacted little to news of U.S. trade data showing
that America's monthly trade deficit in March had narrowed as
U.S. exports rose. The Commerce Department said the trade gap
narrowed 3.6 percent to $40.4 billion.
Economists polled by Reuters had forecast the trade deficit
falling to $40.3 billion in March.
"It was what everyone expected and in line with forecasts,"
(Editing by Bernadette Baum and Nick Zieminski)