An auction of $ 56 billion of two-year notes on Monday saw mild demand, peaking at 0.769%, about half a basis point above where they had traded before the sale. The two-year return of the papers traded at 0.748% after rising to 0.758%.
Longer-term paper yields fell slightly, but remained within their recent ranges. The Treasury sold $ 57 billion in five-year notes on Tuesday at a top rate of 1.263%, and will put $ 56 billion in seven-year debt on the market on Wednesday.
Five-year note yields traded at 1,243%, down from 1,250% on Monday night.. Seven-year notes yielded 1,405%, down from 1,410% on Monday; while the return of the 10-year benchmark papers rose to 1,479% from 1,477%.
The yield curve between the two-year and 10-year notes flattened to 71 basis points, the smallest yield gap since November 23.