Government bond prices edged up on Tuesday even as negotiations to raise the U.S. borrowing limit remain at an impasse.
An auction of $35 billion in two-year notes went well considering the uncertainty over the debt talks. Investors placed bids for 3.14 times the amount of notes up for sale, slightly lower than the average over the past year.
Washington has until Aug. 2 to raise the country's borrowing limit or risk defaulting on its debt. The Treasury market has remained steady as the deadline nears. Some traders believe a debt crisis would send nervous investors rushing into bonds as other markets turn volatile.
The price of the 10-year Treasury note rose 65.6 cents for every $100 invested in afternoon trading. Its yield fell to 2.95 percent from 3 percent.
The price of the 30-year Treasury rose 43.7 cents. Its yield fell to 4.28 percent from 4.32 percent late Monday. The yield on the two-year note ended the trading day with a 0.39 percent yield, down from 0.42 percent.
In the market for short-term Treasury bills, the three month T-bill paid a 0.05 percent yield. Its discount was 0.06 percent.