U.S. Treasurys prices slid on Tuesday as a safety bid in the previous session faded, though yields remained low as investors weighed the Federal Reserve's easing options for the rest of the year.
U.S. benchmark 10-year Treasury notes just about erased Monday's price gains, with yields almost exactly at their levels of the end of last week.
Investors shied away from riskier assets such as stocks on Monday after gold posted a record one-day drop and explosions at the Boston Marathon fed a flight to safety.
"We're just seeing the unwind of that today," said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco.
"But yields are still on the lower end; 10 years are just barely above 1.70" percent, she pointed out.
That, in turn, suggests the market still expects more easing from the U.S. Federal Reserve this year, she said.
Subdued inflation data on Tuesday reinforced that belief: U.S. consumer prices fell in March for the first time in four months.
"With no inflation, the Fed is free to pursue its full employment mandate to the fullest," said Chris Rupkey, managing director and chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.
U.S. 10-year notes traded down 10/32 in price to yield 1.722 percent, from 1.69 percent late on Monday.
Thirty-year bonds fell 25/32 in price to yield 2.906 percent from 2.8681 percent late on Monday. Those Treasurys fell as much as one point earlier in the session.
Investors are trying to gauge when the U.S. Federal Reserve might slow or stop its $85-billion-per-month purchases of Treasurys and mortgage-backed securities, a bid to prop up the economy and boost employment.
Fed speakers have given little clarity on that question, which is a key issue for the Treasurys market.
The influential chief of the New York Fed, William Dudley, told the Staten Island Chamber of Commerce on Tuesday that he expects "sluggish" economic growth of 2 to 2.5 percent this year and only a modest decline in unemployment.
But Chicago Fed President Charles Evans, speaking at a different event, said he sees "moderate" growth this year of 2.5 percent and a "terrific" 2014.