Yields gained momentum earlier after the Commerce Department revised higher its estimate of gross domestic product growth to a 5.0 percent annual pace from 3.9 percent reported last month, citing stronger consumer and business spending. A gauge of business investment plans, however, was unexpectedly flat in November, suggesting a slowdown in economic growth after a brisk expansion over the last two quarters.
The Commerce Department said non-defense capital goods orders, excluding aircraft, a closely watched proxy for business spending plans, was unchanged after a downwardly revised 1.9 percent drop in October.
Read MoreGood news-bad news: GDP booms, durables sink
"This is spectacularly strong growth," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. "But the fact that durable goods orders are slowing the way they are is a little concerning, and doesn't bode positively for (fourth quarter) growth numbers."
That has hurt short and intermediate-dated debt, which are the most sensitive to interest rate increases, relative to 30-year bonds.
In addition,sales declined 1.6 percent to a seasonally adjusted annual rate of 438,000 units. October's sales pace was revised down to 445,000 units from 458,000 units.
Read MoreConsumerspending records biggest gain in months
And U.S. consumer sentiment jumped in December to its highest level in nearly eight years on cheaper gasoline and better job and wage prospects, a survey released on Tuesday showed.
The Treasury saw solid demand for $27 billion in two-year notes on Monday, which sold at the highest yield in three-and-a-half years. The Treasury will also sell $29 billion in seven-year debt on Wednesday