The Treasury sells $32B in three-year notes at 1.349% (.pdf). Bid-to-cover of 3.01, vs. a recent 3.05; indirect bidders take 27.6%, vs. a recent 35%. Direct bidders take 10.1%, vs. a recent 15%. Bonds move still lower: 10-year yield +0.03 to 3.66%; 5-year +0.06 to 2.33%.
Atlanta Fed President Dennis Lockhart: Look beyond pricing of commodities, especially gasoline; inflation is "tame" and should rise slowly until 2% by 2013. About 25% of consumer's market basket showed declines in December. Fed and public aren't on "different planets"; policymakers need to stay focused on broad inflation and not on "individual movements" of bees in the pricing swarm.