U.S. Treasurys traded lower after the Treasury Department's two-year notes sale on Tuesday.
The department auctioned $26 billion in two-year notes at a high yield of 0.69 percent, which is slightly under a 0.692 percent average.
The bid-to-cover ratio, an indicator of demand, was 3.42, in line with a recent average.
Indirect bidders, which include major central banks, were awarded 54.4 percent, well above a recent average of 42 percent.
Direct bidders, which include domestic money managers, brought 17.9 percent, slightly higher than a recent average of 15 percent.
The yield on the two-year note slightly extended gains following the auction, trading up 1.6 basis points at 0.67 percent, while the yield on the benchmark 10-year Treasury rose 2.4 basis points to 2.2517 percent. When a bond's yield rises, its price falls.
U.S. Treasury prices were also lower as a note of caution entered the market amid the start of a U.S. Federal Reserve meeting.
The Fed kicked off a two-day meeting and is not expected to unveil any changes to monetary policy on Wednesday. Still, focus is on whether the post-meeting statement will indicate whether the U.S. central bank is gearing up for a September rate hike.
Against a backdrop of a sharp fall in commodity prices, which puts downward pressure on inflation, and turmoil in Chinese equity markets, there is some talk that the Fed could raise rates later rather than sooner.
"As the Federal Reserve starts its two-day policy meeting it seems quite likely that these events are likely to play a part in the U.S. central bank's thinking with respect to its policy stance," said Michael Hewson, chief market analyst at CMC Markets in a note.
"And with events in Greece by no means resolved tomorrow's decision is unlikely to offer any clues with respect to a September move," he added.
In economic data news, the July services Purchasing Managers' Index (PMI) came in slightly better than expected at 55.2. Economists expected the index to come in at 55.
The July consumer confidence index came in at 90.9, below economists expectations of 100, the survey said.
U.S. home prices also rose in May, but the increase fell short of expectations, according to the S&P/Case-Shiller Home Price Index released Tuesday.
Elsewhere, U.S. stocks traded higher, while U.S. oil futures also rose.