By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices pared gains on Tuesday after a report showed consumer confidence improved more than anticipated this month.
Providing some support, investors followed a typical pattern of buying bonds on the last day of the month to remain in line with benchmark indexes.
Yields on 10-year notes (UST10Y 2.50, -0.03, -1.19%) , which move inversely to prices, fell 1 basis point to 2.51%, after sliding to 2.46% earlier in the session. A basis point is 0.01%.
Yields on the benchmark security touched 2.42% last week, the lowest level since January 2009 -- before the stock-market lows during the credit crisis and recession.
Yields on 2-year notes (UST2YR 0.50, -.00, -0.80%) were little changed at 0.50%. They fell to an all-time low of 0.45% a week ago.
Thirty-year bond yields (UST30Y 3.56, -0.02, -0.59%) fell 2 basis points to 3.57%. Last week, they declined to 3.46%, the lowest since March 2009.
We see "yields edging lower on month-end extension demand," said strategists at CRT Capital Group.
The Conference Board's index on consumer confidence rose to 53.5 in August.
Separately, Case-Shiller's home price index rose and the purchasing managers' index for the Chicago region fell to 56.7 in August from 62.3 in July. Read more about home prices.
Still to come are minutes from the Federal Open Market Committee's recent policy meeting. Analysts will focus on any color related to officials' decision to reinvest cash from their maturing mortgage-related holdings into Treasurys. Some investors are looking for signals about what would drive the Fed to re-open its so-called quantitative easing program and buy bonds outright.
"We get a lot of information both today and the rest of the week, and I expect it will be a choppy market," said strategists at RBS Securities.
The key report will come Friday, when the U.S. Labor Department is expected to say that private employers added 30,000 jobs in August and that the unemployment rate ticked higher. See story on jobs-report expectations.
"It is hard to see the market penetrating the low yields of last week unless we move to full expectations of additional quantitative easing," RBS said.
Buyers tend to materialize on the last trading day of every month, when benchmark bond indexes add any debt that was sold during the period, which usually extended the duration of the index.
Duration is a measure of price sensitivity to a change in interest rates, and is partly determined by maturity. Fund managers who try to match their holdings to benchmark indexes buy recently issued debt at month's end.
