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Treasury yields rise as US-China trade talks continue

Treasury yields rose on Tuesday as optimism that a U.S.-China trade deal could be in the works boosted risk sentiment.

The yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 2.71 percent, while the yield on the 30-year Treasury bond was also higher at 2.9949 percent.

U.S. Markets Overview: Treasurys chart

Several officials from the world's two largest economies resume talks in a bid to end their ongoing trade dispute. U.S. Commerce Secretary Wilbur Ross told CNBC on Monday that both global powers could reach a settlement "they can live with, and that addresses all the key issues."

China's Foreign Ministry previously said Beijing had "good faith" to work with Washington to reach an agreement before a March deadline. However, many analysts remain deeply skeptical about the likelihood of both sides brokering a comprehensive trade deal.

President Donald Trump also tweeted on Tuesday that U.S.-China trade talks are "going very well."

Stocks rose on Tuesday, with the Dow Jones Industrial Average trading more than 150 points higher.

On the data front, the latest monthly Job Openings and Labor Turnover Survey (JOLTS) showed openings declined to about 6.9 million in November. That is still about 800,000 more than there are workers.

Yields also rose after the Treasury Department auctioned $38 billion in 3-year notes. The bid-to-cover on the sale, a measure of demand, was 2.44. 

Peter Boockvar, chief investment officer at Bleakley Advisory Group, characterized the auction as "soft."

"With the markets having taken out the prospect of another rate hike this year, the set up was perfect for a good auction which as stated we didn't get," Boockvar said in a note. "My guess on why it wasn't good is twofold. 1)The 3 yr yield had already fallen from 3.04% in early November, thus reducing the allure at current levels and 2)the enormous amount of supply coming our way this year will continue to keep a lid on prices/bid to yield."

—CNBC's Fred Imbert contributed to this report.