U.S. government debt prices were lower on Tuesday as investors digested fresh economic data and eyed the 3-year note auction.
The Treasury Department auctioned $24 billion in 3-year notes at a high yield of 1.63 percent. The bid-to-cover ratio, an indicator of demand, was 2.74.
Indirect bidders, which include major central banks, were awarded 49.4 percent. Direct bidders, which includes domestic money managers, bought 8.4 percent. The recent 10-auction average for indirect bidders was 52 percent and 9 percent for direct bidders.
"Bottom line, the highest yield in almost 7 years wasn't enough to encourage buyers to bid aggressively for 3 yr paper. It, of course, comes a week before the next rate hike that seemed to come out of nowhere," said Peter Boockvar, chief market analyst at The Lindsey Group, in a note.
The yield on the 3-year note was around 1.607 percent after the sale.
The yield on the benchmark 10-year Treasury notes, which moves inversely to price, was higher at 2.514 percent, while the yield on the 30-year Treasury bond was also higher at 3.114 percent.
On the data front, the U.S. trade deficit widened to $48.49 billion in January.
Investor expectations for a March interest rate hike in the U.S. are high ahead of the Federal Open Market Committee meeting on March14-15.
In oil markets, Brent crude traded at around $55.92 a barrel on Tuesday, down 0.16 percent, while U.S. crude was around $53.14 a barrel, down 0.11 percent.