TREASURIES-US yields advance as investors cautious of upcoming auctions

By Gertrude Chavez-Dreyfuss NEW YORK, Nov 6 (Reuters) - U.S. Treasury yields rose on Monday, after posting multi-week declines last Friday, as investors grew cautious about large auctions of notes and bonds this week that could determine whether there is enough demand for U.S. government debt to push rates lower again. "There are some larger auctions coming this week and there may be hesitancy on going long bonds ahead of these auctions," said Thierry Wizman, global FX and rates strategist at Macquarie in New York. The Treasury is set to auction $48 billion in U.S. three- year notes on Tuesday, $40 billion in 10-year notes on Wednesday, and $24 billion in 30-year bonds on Thursday. There are also about $323 billion in bills expected this week. Analysts also said there is some "concession" going on after last week's big rally that pushed yields lower following a refunding announcement that saw smaller-than-expected increases in auction sizes, dovish comments from Federal Reserve Chair Jerome Powell, and a weaker-than-forecast U.S. nonfarm payrolls data. In a supply concession, traders tend to sell Treasuries before an auction so they can buy them back at a lower price. In late morning trading, the yield on 10-year Treasury notes was up 7.7 basis points (bps) to 4.635%, on pace for the most gains in more than a week. Last Friday, 10-year yields dropped to a five-week low. "Ten-year yields should eventually go back 4%," said Wizman. We have seen the peak in yields, but more importantly when the economy slows, you're going to see the 4%, you're going to see yields fall. Do we retest 5% in the 10-year? I doubt it." The yield on the 30-year Treasury bond was up 6.4 b p s to 4.816 %, on track to post its largest daily increase since Oct. 25. A closely tracked part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes was at -26.0 basis points. This part of the curve has historically predicted upcoming recessions, forecasting eight of the last nine. The curve has deepened its inversion after steepening the last few weeks. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 6.3 bps points at 4.895%, set for its biggest one-day gain in three weeks. November 6 Monday 10:58AM New York / 1558 GMT Price Current Net Yield % Change (bps) Three-month bills 5.2725 5.4288 -0.001 Six-month bills 5.2525 5.4816 0.005 Two-year note 100-50/256 4.8947 0.063 Three-year note 99-202/256 4.7016 0.075 Five-year note 101-84/256 4.5736 0.086 Seven-year note 101-110/256 4.6328 0.086 10-year note 94-12/256 4.6389 0.081 20-year bond 92-64/256 4.9959 0.068 30-year bond 89-16/256 4.8203 0.068 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrea Ricci)