US 10-year yield drops below 2.8%, down from 3.13% earlier in the month

U.S. government debt yields fell on Tuesday as Italian and Spanish political turmoil spooked euro zone markets.

The yield on the benchmark 10-year Treasury note broke below 2.8 percent on Tuesday, down from highs above 3.13 percent earlier this month. The yield on the 30-year Treasury bond, meanwhile, was down at 3.006 percent. Bond yields move inversely to prices.

Concerns about a global credit blight and anemic interest rates appeared to push investors toward safer assets on Tuesday.

Over the weekend, Italy's president appointed former International Monetary Fund official Carlo Cottarelli as interim prime minister to form a new cabinet and restore political order within the country.

The euro zone's third-largest economy has been struggling to establish a stable government since inconclusive elections in March, with anti-establishment forces abandoning their effort to form a ruling coalition over the weekend.

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"The more recent bout of political turmoil spanning across a number of member countries coupled with a clear loss of economic momentum in the region has investors questioning the sustainability of the recovery and the future of the bloc," Lindsey Piegza, chief economist at Stifel Nicolaus, wrote in an email to CNBC. "In the wake of increased uncertainty, it appears the European Central Bank will have no choice but to continue to provide support for some time, falling further behind the Federal Reserve."

The latest developments have spurred dormant fears concerning the stability of the eurozone and default risk concerning Italy's €2.3 trillion ($2.68 trillion) in debt.

The 10-year Italian bond yield jumped above 3.38 percent early Tuesday, its highest level since March 2014.

Yields are also down since the Federal Reserve's May meeting minutes revealed that central bankers would be comfortable allowing inflation to temporarily run above its 2 percent target.

Following the May meeting, the policymaking arm of the Fed said it wasn't raising rates yet but added the word "symmetric" to describe its inflation goal. Until now, market participants have debated what that language meant.

Specifically, the minutes said "a temporary period of inflation modestly above 2 percent would be consistent with the Committee's symmetric inflation objective."

Though the general tone was that inflation would continue to rise, there was disagreement over how confident the Fed should be after undershooting its target for so long, with some members amenable to letting the prices climb higher.

—CNBC's Jacob Pramuk and Reuters contributed to this report