NEW YORK, May 13 (Reuters) - Treasuries recouped much of their early losses on Thursday after an auction of new U.S. government debt attracted the strongest overall demand in three years and drew good interest from retail bidders.
The sale of $15 billion in new 10-year Treasury notes went at a lower-than-expected yield of 4.848 percent and drew bids for 2.78 times the amount on offer, easily beating February's 2.00 level and the 1.83 average of last year's auctions.
Indirect bidders, including customers of primary dealers and foreign central banks, picked up $6.43 billion or 43 percent of the issue. That was slightly down from February's high 45 percent and easily beats the average 29 percent at previous sales. Primary dealers themselves got $8.28 billion of the issue.
The current 10-year note (US10YT=RR) came off its lows to be 1/32 easier in price, leaving its yield at 4.82 percent from 4.81 percent on Wednesday. Earlier, it briefly touched 4.87 percent, its highest level since July 2002.