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US Treasury yields hold lower after auction

Symbol
Yield
 
Change
%Change
US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
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US 10-YR
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US 30-YR
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U.S. government debt prices held higher Tuesday following a sale of two-year notes and as a rally in risk assets faded.

The yield (which has an inverse relationship to the price) on the benchmark 10-year Treasury note fell to 1.721 percent, while the yield on the 30-year Treasury bond also dipped to 2.574 percent.

The slides in yields came as oil prices fell and U.S. and European stock markets dipped.

The Treasury Department also auctioned $26 billion in two-year notes at a high yield of 0.752 percent, the lowest yield since September, according to Reuters. The bid-to-cover ratio, an indicator of demand, was 2.91, versus a recent average of 3.17.

Indirect bidders, which include major central banks, were awarded 55.8 percent, against a recent average of 46 percent. Direct bidders, which includes domestic money managers, bought 10.8 percent, compared to a recent average of 15 percent.

The oil price has led to volatility in both debt markets and equity markets and that trend was no different on Tuesday. With oil lower on the back of supply concerns from Iran, European and U.S. markets fell back. The selling has given a boost to U.S. Treasury markets, which are seen as a safe haven asset.

WTI and Brent crude prices both slid more than 4 percent Tuesday, a day after a surge. Saudi Oil Minister Ali al-Naimi said at the CERAWeek energy conference in Houston that there is more to unite energy industry participants than to divide them.

On the data front, the S&P/Case-Shiller home prices index showed home prices in December rose 5.7 percent. Existing home sales, meanwhile, rose to their highest level in six months.

"Bottom line, in order to unclog the housing industry in terms of the currently depressed entry of the first time buyer which then impacts the move up buyer, we need more lower priced homes that can better compete against renting," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.

Investors will also be watching for more hints on future policy at the U.S. Federal Reserve and whether it will continue its tightening process this year. Fed Vice Chairman Stanley Fischer is due to speak after the closing bell.