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The Treasury launched a record week of debt auctions Monday by selling $6 billion of 20-year inflation-protected securities, or TIPS, at a high yield of 2.387 percent.
But investors remain worried that the global market may have difficulting digesting the $211 billion of debt to be sold this week.
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The TIP sale, which was expected to do well, had a record bid-to-cover ratio—which measures how much the auction is oversubscribed—of 2.27.
Monday's auction will be followed by the sale of $42 billion of 2-year notes Tuesday, $39 billion of five-year notes Wednesday and $28 billion of seven-year notes Thursday.
In addition to the note auctions, the Treasury will also sell shorter-term bills, which could bring to over $200 billion the total amount of U.S. debt to be auctioned this week.
"We expect demand to develop for the Treasury auctions, but $211 billion is a lot of paper for a summer holiday week," said Andrew Brenner, senior vice president at MF Global in New York.
Treasurys extended losses after data showing higher than expected new home sales in June further eroded the safe-haven appeal of government debt.
The benchmark 10-year Treasury note was trading 24/32 lower in price for a yield of 3.76 percent, up from 3.66 percent late Friday, while the 30-year bond was 1-17/32 lower for a yield of 4.64 percent from 4.54 percent.
"Traders and investors have no incentive to step in front of the U.S. supply train and yields have backed off accordingly," said Chris Ahrens, strategist with UBS in Stamford, Conn.
Investors will also closely follow the direction of stocks this week in a busy session for corporate earnings reports.
The stock market briefly turned positive after the housing numbers were released but turned back to slightly negative numbers.
Two-year notes were trading 3/32 lower in price for a yield of 1.06 percent, up from 1.01 percent late Friday, while the 30-year bond was 1-11/32 lower for a yield of 4.63 percent from 4.54 percent.
Five-year Treasury notes were trading 10/32 lower in price for a yield of 2.61 percent, up from 2.54 percent late Friday.
Data is a real-time snapshot *Data is delayed at least 15 minutes