The 10-year Treasury notes fell 12/32 to 99-15/32 for yield of 4.567%, while the 30 year bonds were off 23/32 at 108-03/32 for yield of 4.761%.
News hit that the November Nonmanufacturing Institute for Supply Management index fell to 58.5 from 60.0 the previous month, a bit more than the consensus estimate of 59.3. As with the manufacturing index released last week, the drop was concentrated in prices and order backlogs, however.
The Treasury Department announced plans to auction $13 billion of 5-year notes and an $8 billion 10-year reopening, as expected. The auctions will be Wednesday and Thursday, respectively. Meanwhile, Action Economics reported that debt managers cut the size of Tuesday's 4-week bill sale to $16 billion from $20 billion last week.
Investors continued scrutinizing the U.S. economy and inflation, as they make their bets on how the Federal Open Market Committee will move next on interest rates. Fed funds futures show a 68% chance that the rate will rise to 4.75% by March from current 4% level. The Fed has already raised rates 12 times since 2004, in an effort to control inflation by making debt more expensive.