U.S. Treasurys fell Tuesday, as a stock market rally and unexpected strength in housing data led investors to trim their holdings of safe-haven government bonds.
A report showing pending home sales rose unexpectedly in September added a slight bit of momentum to a wave of bond market selling that started early in the session.
But it was stocks that carried the day as higher-risk investments benefited from surprisingly robust profits reported by Wal-Mart Stores, sending a strong sell signal to bonds.
The move gained support after Goldman Sachs Group's chief executive said he expected no significant asset write-downs at the investment bank, allaying some recent concerns over financial sector health after this year's mortgage meltdown.
"The rebound in the stock market after four days of pretty substantial losses is taking a little bit of the bid out of Treasuries," said Kim Rupert, managing director, global fixed income analysis, Action Economics in San Francisco.
"We'd already been lower through the day on equities... The pickup in pending home sales was only slight and I don't think that many in the market believe we're out of the woods in terms of housing."
The benchmark 10-year note fell 13/32 in price on the day, pushing yields up to 4.26 percent from 4.21 percent late on Friday. The Treasury market was closed on Monday for the Veterans Day holiday.
Ten-year yields briefly touched two-year lows overnight before traders took cues from the higher stock futures to sell bonds.
The two-year note slid 8/32, pushing the yield up to 3.54 percent from 3.41 percent.