By Deborah Levine, MarketWatch NEW YORK (MarketWatch) -- Treasury prices edged higher on Monday, pushing yields down for a second day, as investors abroad got a chance to buy after Friday's surprisingly weak U.S. jobs report. Gains may be limited before the Treasury Department sells $10 billion in inflation-indexed debt, the first of four big auctions this week that will bring $84 billion in new debt to the market. Yields on 10-year notes (UST10Y 3.83, +0.01, +0.18%) slid 2 basis points to 3.82%. Bond prices move inversely to their yields. A basis point equals 0.01 percentage point. Yields on 2-year notes (UST2YR 0.97, -0.05, -5.07%) declined 2 basis points to 0.94%. Long-term-debt yields are also near the highest since August, making the debt more attractive to investors. "Long Treasury rates remain near levels where buyers put a floor under prices in early August," said bond strategists at RBS Securities. "Even so, inflation and supply fears still appear to have a grip on the market's psyche, and there has been little get up and go from these levels so far." Treasury prices rose Friday, sending yields lower, after the Labor Department said the U.S. economy lost 85,000 jobs in December, while analysts had been hopeful that the economy added jobs during the month. See Friday's Bond Report. The data supported analysts and investors who expect that a rocky, slow economic recovery will enable the Federal Reserve to keep benchmark interest rates near zero for a long time. That will keep short-term yields low, as they tend to be pinned to the Fed's target rate. Yield curve steepening At the same time, the government will be selling a lot of debt, and has said it will focus on longer-term securities to lengthen the average maturity of its debt. That has weighed on bonds, pushing yields in that sector higher. That has expanded the gap between yields on short-term and long-term debt, steepening the yield curve that charts the spread between them. Ten-year notes yield 2.88 percentage points more than 2-year debt, the widest the gap has ever been. Investors who expect that gap to widen further may buy more shorter-dated debt and sell longer-dated securities, or some variation on that strategy. "What is taking place is both a willingness to step aside and allow for auction concessions -- the passive way -- and adding to steepening trades -- active -- to play that concession," said strategists at CRT Capital Group. The government will accept bids on the 10-year Treasury Inflation Protected Securities, or TIPS, until 1 p.m. Eastern Time. See more on Treasury's auctions. In the past five sales of 10-year TIPS, bidders have offered an average of $2.51 for each $1 of debt being sold, according to RBS. Indirect bidders, a group that includes foreign central banks, have purchased an average of 42.9% of the past five sales. Traders tend to sell existing holdings of securities before an auction to get a better price and have cash to buy the newest, most liquid maturities. Traders may already be building those concessions, especially before the 10-year-note and 30-year-bond (UST30Y 4.71, +0.03, +0.56%) sales on Wednesday and Thursday. The government will also sell $40 billion in 3-year notes (UST3YR 1.54, -0.04, -2.35%) on Tuesday.

Source