Government kicks off refunding by selling $32 billion in three-year notes Treasurys advanced early Tuesday, pushing yields down from their highest in at least two months, as Treasury Secretary Timothy Geithner was slated to lay out new plans to help troubled banks and the Senate expected to vote on the economic stimulus package. Ten-year note yields fell 6 basis points to 2.92%, after reaching above 3% Monday for the first time since November. A basis point is 0.01%. Yields on two-year notes fell 5 basis points to 0.98%, after passing 1%, the highest since December. Equity markets in Europe declined and U.S. futures pointed lower ahead of Geithner's speech, scheduled for 11 a.m. Eastern time. See story on bailout plan. President Barack Obama appeared on television Monday evening to press his case for an economic stimulus package, saying the $800 billion-plus plan moving through Congress is urgently needed and only the government can now break the "vicious cycle" in which the economy is stuck. See story on Obama's speech. "Weaker stocks are part of the issue, plus rather dire economic and systemic sentiment raised by Obama and Geithner," said strategists at RBS Greenwich Capital. Federal Reserve Chairman Ben Bernanke is also due to address Congress, at 1 p.m. Eastern time, on efforts to restore liquidity. Trading activity may be limited before the government sells a record $32 billion in three-year notes , kicking off the biggest quarterly sales of notes and bonds on record. Two bill auctions will precede the three-year sale. Wednesday will bring $21 billion in 10-year notes, followed by $14 billion in 30-year bonds the following day. Both long-term debt sales are for the most ever. Notes near these yield levels are a good opportunity, as real money that has kept holdings short or in cash moves off the sidelines during the refunding auctions, according to Tom di Galoma, head of U.S. government bond trading at Jefferies & Co.

Source