Two-year US Treasury auction disappoints, sends prices lower

Prices for US Treasury bonds dropped again and yields rose after a new auction of two-year paper on Tuesday disappointed. The auction drew 2.53 bid-to-cover ratio, below the 2.93 level of the most recent auction and below the average ratio of 2.8 for 2-year auctions in the past six months. Indirect bids were lower as well, down to 22 percent, another indication that the auction was not popular.

Analysts said that investors were worried about the possibility that interest rates could rise again soon. In addition, they said, investors could be hesitating ahead of May’s jobs data, due on Friday.

After the auction, two-year Treasury bonds were yielding 4.91 percent, while ten-year paper was at a yield of 4.89 percent.

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