* U.S. durable goods data come in weaker than forecast * U.S. new home sales rebound, lifts yields * Markets focus on U.S. 2-year note auction (Recasts, adds 2-year note auction details, new comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Dec 23 (Reuters) - U.S. Treasury prices slipped, pushing yields slightly higher, in generally thin trading on Monday as investors sold government debt ahead of a two-year note auction and as market participants squared up positions going into year-end. The market this week is bracing for $113 billion in U.S. note auctions that could cheapen rates, analysts said. The U.S. Treasury will auction $40 billion in two-year notes on Monday, $41 billion in 5-year notes on Tuesday, and $32 billion in 7-year notes on Thursday. Investors typically sell Treasuries ahead of an auction to push the yield higher so they can buy them at a lower price, a move typically called supply concession. "A lot of it is some concession for the supply ahead of the auctions," said Justin Lederer, Treasury trader, at Cantor Fitzgerald in New York. "It's not huge selling by any means, but we'll see how the auctions go. December auctions are usually a wild card." A weaker-than-expected U.S. durable goods report for November pushed yields a little lower early in the session. The details of the report, though, were not as soft as the headline suggested, analysts said, lifting yields off their lows. U.S. orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, edged up 0.1% last month, with the decline in orders for machinery offsetting the surge in demand for electrical equipment, appliances, and components. Overall, trading is expected to slow in the holiday-shortened week, and ahead of the year-end. "It's going to be thin volume," said Stan Shipley, fixed-income strategist at Evercore ISI in New York. "People would want to lock in their positions over the next week or two. You really don't want to destroy the good returns you have this year by taking an outside bet." So far this year, the ICE Bank of America Merrill Lynch U.S. Treasury Index, a gauge of the Treasury market's performance, was up nearly 7%. In midday trading, the yield on the U.S. 10-year note inched up to 1.922% from 1.917% late on Friday, while U.S. 30-year bond yields were slightly up at 2.347% from 2.346% on Friday. Yields also edged higher after data showed U.S. new home sales rebounded 1.3% to a seasonally adjusted annual rate of 719,000 units last month, lifted by gains in activity in the Northeast and West regions. Ahead of the auction, U.S. two-year yields were up at 1.648% , from Friday's 1.629%. The yield curve flattened for a second straight session on Monday, with the spread between the two-year and 10-year note yields falling to 27 basis points. Ahead of the year-end, market participants sought to unwind steepening trades put on over the last two weeks as U.S.-China trade concerns eased with a preliminary deal on the horizon. December 23 Monday 11:50AM New York/1650 GMT Price Current Net Yield % Change (bps) Three-month bills 1.55 1.5817 0.003 Six-month bills 1.56 1.5983 0.023 Two-year note 99-184/256 1.6481 0.019 Three-year note 99-220/256 1.6736 0.014 Five-year note 98-220/256 1.7422 0.013 Seven-year note 98-128/256 1.8565 0.013 10-year note 98-112/256 1.9241 0.007 30-year bond 100-144/256 2.3487 0.003 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.00 -0.25 spread U.S. 3-year dollar swap 3.25 0.25 spread U.S. 5-year dollar swap -0.25 0.25 spread U.S. 10-year dollar swap -4.75 -0.25 spread U.S. 30-year dollar swap -29.50 -0.50 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Dan Grebler and Andrea Ricci)
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