TREASURIES-Prices little changed after 3-year note auction

* Three-year note auction meets with lackluster reception

* $35 bln 3-year note sale kicks off week’s offerings

* 10-year notes hold above support at 3.06 percent
(Adds strategist quote, updates prices)

By Chris Reese

NEW YORK, July 12 (BestGrowthStock) – U.S. Treasury debt prices
were little changed on Monday as stocks hovered near the steady
mark and neither added much, nor subtracted from, the
safe-haven allure of government debt.

Treasuries pared slight gains on Monday afternoon following
a somewhat lackluster reception for the sale of $35 billion of
three-year Treasury notes, in the first of this week’s $69
billion worth of bond auctions.

“Treasuries were trading firmer ahead of the auction, with
stocks under pressure,” said Ian Lyngen, senior government bond
strategist at CRT Capital Group in Stamford, Connecticut,
noting that three-year notes built in little in the way of a
concession.

“Since the results, Treasuries have moved lower off the
highs,” he said.

Analysts are watching the auctions closely since the bond
market remains relatively expensive after a three-month rally,
which recently pulled benchmark yields below 3.0 percent from
more than 4.0 percent at the start of April.

Though bond prices have retreated from their highs as a bit
of an equities recovery dimmed the allure of safe-haven
government bonds last week, auctions may test the patience of
bond bulls who expect low growth and inflation to support debt
prices.

“Bonds have a lot of fans and there are signs that there
are too many bulls,” said William O’Donnell head of U.S.
Treasury strategy at RBS Securities in Stamford, Connecticut.

“I still fancy being flat here — we’re still in a primary
bull trend — while looking for a dip to supports to reload
longs.”

The benchmark 10-year note (US10YT=RR: ) was trading 2/32
higher in price to yield 3.05 percent, down slightly from 3.06
percent at Friday’s close.

However, it was up from a one-year low of 2.88 percent hit
at the start of July when a rally driven by fears over Europe’s
fiscal crisis and worries the U.S. recovery was fizzling hit
its peak.

Ten-year notes are right above technical support at 3.06
percent, according to O’Donnell. Additional support is at 3.128
percent and the strongest support is around 3.33 percent, he
added.

The 30-year long bond (US30YT=RR: ) was last down 1/32 in
price to yield 4.04 percent.

The Treasury will auction $21 billion of reopened 10-year
notes on Tuesday and $13 billion of reopened 30-year bonds on
Wednesday.

“It’s the 30-year that’s always the big question mark. The
10-year often has support from central banks but as you move
out the curve it becomes a question mark as to what demand base
will show up to take down that paper,” said Michael Pond,
Treasury and inflation-linked strategist at Barclays Capital in
New York.

Three-year notes (US3YT=RR: ) were trading 1/32 lower in
price to yield 1.03 percent from 1.02 percent late on Friday.
(Additional reporting by Burton Frierson; Editing by Leslie
Adler)

TREASURIES-Prices little changed after 3-year note auction