(Bloomberg) -- US government debt advanced on Tuesday as the Treasury’s hefty $69 billion sale of two-year notes lured solid buyer demand — even as a much-desired 5% coupon proved elusive.

The sale of two-year Treasuries was awarded at 4.898%, slightly lower than the 4.904% yield in pre-auction trading at the 1 p.m. New York time bidding deadline — a sign that demand outstripped expectations. The world’s biggest bond market still has to absorb two more reams of supply this week, though — $70 billion of five-year notes on Wednesday and $44 billion of seven-year notes the following day.

“It was a pretty impressive auction,” said Tony Farren, managing director in rates sales and trading at Mischler Financial Group. “And considering the price action we’ve had over the better part of the last two weeks,” with a lot of selling, “the auction was a success. That’s especially true when you consider you have $70 billion five-year notes coming tomorrow.”

Treasury yields have risen each of the last four weeks as resilient economic data and sticky inflation pushed traders to further scale back how much they foresee the Federal Reserve cutting rates this year. Swaps traders are pricing in only about 43 basis points of rate reductions for all of 2024, compared with more than six quarter-point cuts expected at the start of the year.

The auction had a backdrop of declining benchmark rates after a gauge of US business activity in April showed the slowest pace of expansion this year. Signs of slowing employment in the report supported good demand for the auction, Farren said, despite a yield insufficiently high for a 5% coupon rate.

Metrics showing solid demand for the 2-year auction included total bids relative to the amount offered — known as the bid to cover rate — higher than for recent sales. Also, primary dealers wound up with a historically small share as investor demand was strong.

Read More: Bond Traders Look to Record Auction for Sign 5% Yield Is Peak

The yield on benchmark two-year Treasuries moved to the day’s low after the auction, reaching about 4.91%, down six basis points versus Monday. Ten-year Treasury yields also declined further before paring their drop to about a basis point.

Thomas di Galoma, co-head of global rates trading at BTIG, also said the two-year auction was “very good.” He warns, however, that the sales of 5- and 7-year notes may not show such solid demand.

“There was a bid in the market after the auction, but it is fading a bit now,” di Galoma said. “The Treasury market will have issues taking down” the rest of the other auctions this week.

(Updates rates throughout.)

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