Bond yields tumbled on Tuesday after the U.S. government's auction of 2-year Treasury notes drew average demand.
The Treasury Department auctioned $26 billion in two-year notes at a high yield of 0.648 percent, the highest since December. The bid-to-cover ratio, an indicator of demand, was 3.40, compared to a recent average of 3.42.
Two-year Treasury notes were last down slightly in price to yield 0.627 percent, from a yield of 0.63 percent late on Friday. Benchmark 10-year Treasury note yields were at 2.14 percent, from a yield of 2.23 percent late on Friday.
Indirect bidders, which include major central banks, were awarded 42.3 percent, above the 40 percent average. Direct bidders, which includes domestic money managers, brought 17.2 percent, versus a recent average of 14 percent.
Short-dated U.S. Treasury yields hit two-week highs earlier on continued expectations that the Federal Reserve would hike rates this year, while yields on longer-dated Treasurys slid on concerns over Greece and global economic growth.
U.S. two- and three-year yields, which are sensitive to expectations on when the Fed will hike rates, hit two-week highs of 0.65 percent and 1.03 percent, respectively, after traders took a sanguine view of U.S. durable goods orders data.
Commerce Department data showed U.S. durable goods order slipped 0.5 percent in April, in line with economists' expectations according to a Reuters poll, but were revised higher to 5.1 percent for March. In addition, U.S. business investment spending plans increased solidly for a second straight month, the data showed.