News of more supply pressuring market Yields on 10-year Treasury notes touched their highest in five weeks Thursday before the government auctions $8 billion of inflation-indexed debt later in the session. The Treasury Department may also say it will sell nearly $100 billion next week. Declines were limited before the Federal Reserve steps back into the market to buy short-term debt and as economic data show poor conditions in the job and housing markets. Ten-year-note yields rose 2 basis points, or 0.02 percentage point, to 2.96%. They touched the highest since mid-March, when the Federal Reserve announced plans to buy $300 billion in Treasurys to keep borrowing costs down. Bond prices move in the opposite direction of yields. Two-year-note yields were little changed at 0.95%. Later, the government will sell $8 billion in Treasury Inflation Protected Securities maturing in five years. Bids are due at 1 p.m. Eastern time. TIPS pay investors a coupon plus the actual rate of inflation as measured by the government's consumer price index. The most recently issued 5-year TIPS carry a yield 0.43 percentage point below regular Treasurys maturing around the same time, according to Barclays Capital. That gap implies what investors expect inflation to average over the life of the debt. The Treasury is also likely to announce it will sell $40 billion in 2-year notes, $34 billion in 5-year debt and $25 billion in 7-year securities, according to Wrightson ICAP, a research firm specializing in government debt. "It's the supply that's coming that is the concern and the palpable disinterest by real money to buy into what's really been range-confined weakness," said strategists at RBS Greenwich Capital. Traders jockeyed ahead of the Federal Reserve's purchase of debt maturing in 2012 and 2013, which supported shorter-term securities. The central bank may try to buy about $3 billion in this operation, much less than the last time it bought 3- and 4-year notes, according to Morgan Stanley analysts. Treasurys recovered from small declines seen earlier after the Labor Department said first-time claims for jobless benefits rose to 640,000 in the latest week. Continuing claims reached a record, indicating that once people are unemployed, they are straining to find new jobs. See more on jobless claims. Separately, the National Association of Realtors said resales of homes and condos fell 3% in March to a seasonally adjusted annual rate of 4.57 million, weaker than economists surveyed by MarketWatch expected. See more on home sales data. More Build America Bonds Also drawing the bond market's attention: Another taxable municipal debt sale is slated for today. The New York Metropolitan Transportation Authority will offer $750 million in 30-year bonds under the Build America Bonds program, three times its original amount due to demand from investors. The agency, which operates the New York subway system and commuter rail service, is selling the taxable bonds under the program Congress approved this year, offering a federal subsidy for the extra interest paid on taxable debt. Municipalities and public agencies usually fund infrastructure needs with tax-exempt debt. Earlier this week, the MTA had planned to sell $250 million. "We increased the amount in response to robust demand we saw in the market from institutional investors," said Aaron Donovan, a spokesman for the MTA. California and the New Jersey Turnpike Authority also significantly increased the size of their offerings this week under the program due to overwhelming demand. Analysts expect bonds to yield 3.65 percentage points more than Treasurys of the same maturity , or about 7.48%.

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