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US Treasury prices turn flat as Greek yields soar

U.S. Treasurys turned flat early Tuesday, paring their initial gains after Wall Street opened higher as company results beat reduced expectations and curbed some appetite for low-yielding U.S. government bonds.

U.S. government debt yields rose earlier as Greek bond yields spiked, amid rumors the European Central Bank (ECB) was making plans for a possible default by Greece.

On Tuesday 10-year Treasury notes, benchmark 10-year Treasury notes yielded 1.894 percent, after closing at 1.897 percent on Monday, up from Friday's close. Thirty-year Treasury notes yielded around 2.561 percent on Tuesday, after closing at 2.572 percent on Monday.

Read MoreECB staff mull plans to curtail bank funding

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The European Central Bank (ECB) is making contingency plans for both an "orderly" and "disorderly" default by Greece, sources told CNBC Tuesday, as the country's borrowing costs soar and Greece edges closer to bankruptcy.

ECB staff have put together a proposal to increase the haircuts on Greek bank collateral that is offered in exchange for Emergency Liquidity Assistance from the Bank of Greece, sources with knowledge of the situation told CNBC. They asked to remain anonymous because of the sensitivity of the situation.

The yield on benchmark Greek ten-year bonds reached 13.619 percent on Tuesday, up from Monday's close of 13.157 percent. Shares of Greek banks fell sharply on Tuesday, extending losses from Monday.

CNBC's Holly Ellyatt and Reuters contributed to this report