Government selling $59 billion in bills and TIPS Treasury prices rose Tuesday, pushing yields lower, as weakness in equities stemming from anxiety over first-quarter corporate earnings attracted investors preferring the safety of government bonds. Two-year note yields fell 3 basis points, or 0.03%, to stand 0.91%. Yields move in the opposite direction of bond prices. Ten-year note yields also declined, down 2 basis points to 2.91%. With little economic data or official speeches on the schedule, "the market will likely give equities their due," said RBS Greenwich Capital. In early trading, the Standard & Poor's 500 Index declined more than 2%, as U.S. equity benchmarks moved broadly lower. The unofficial start of earnings season kicks off later Tuesday when Alcoa will report first-quarter financial results. "The company is expected to report a loss for the period, setting the tone for potentially more dismal results to come," said Ken Jaques, credit and derivatives manager at Informa Global Markets. Also, the International Monetary Fund is expected to update its forecasts later this month to say debts racked up by banks and insurers could spiral to $4 trillion, according to a Times of London report. Ten-year note yields also were correcting lower after being oversold to reach above 2.92%, an important technical level, said John Spinello, Treasury strategist at Jefferies & Co., in emailed comments. Still, gains were limited as the Treasury plans to sell $6 billion in inflation-indexed 10-year securities, with bids due at 1 p.m. Eastern time. The auction is a reopening, meaning the securities, known as TIPS, will carry the same interest rate and maturity as the last 10-year TIPS sold in January. Also up for sale today are $28 billion in 4-week bills and $25 billion in 1-year bills The government will also sell $35 billion in 3-year notes on Wednesday, followed by $18 billion in 10-year notes on Thursday. UBS Securities, one of the 16 primary U.S. government security dealers, noted that the period between late January and early May tends to be very bearish for Treasurys. "Seasonal borrowing needs are nearing their peak right now and pushing this is a collapse in Treasury receipts" from tax payments, UBS said. The supply calendar includes 10 auctions of notes and bonds that will raise about $215 billion in net new cash for the Treasury, said William O'Donnell, U.S. government bond strategist at UBS. That trend toward higher yields tends to end just after the government's quarterly sale of 30-year bonds in May, he said.

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