LONDON: Ten-year US Treasury yields were little changed on Tuesday after the sale of Dutch bonds went smoothly but safe-haven flows should continue to keep yields under pressure.
US 10-year government bond yields were broadly steady at 1.94 percent, having hit 1.91 percent in the previous session - its lowest since February.
"2 percent had been a resistance... now I think it's supportive. I think there is buying interest around the 2 percent area on 10s so if the market does back up I think it's going to be seen as a buying opportunity because of the worsening situation in Europe," Craig Collins, trader at Bank of Montreal said.
The Dutch state sold 2-year and 25-year bonds one day after the government's collapse hurt appetite for its debt in the secondary market.
A failure by the Dutch government to agree on budget cuts spiraled into a political crisis on Monday, with the resignation of the country's prime minister, and cast doubt over the country's support of future euro zone measures. Some in the market also fear that a change at the helm of France could also mean less support for austerity measures.
Such concerns should keep US yields relatively low, and a break through key technical barriers could mean the fall in yields picks up momentum, analysts said.
"We have taken out the key support level that was there in 10-year terms, we busted the 1.96 level, so a lot of people are going to be now focusing on the 1.84-1.85 (percent) level," Marc Ostwald, strategist at Monument Securities said.
"With enough anxiety about the euro zone we could push further down, but we do have a lot of things to focus on domestically over the next 48 hours," he added.
The Federal Reserve is likely to stick to its previous message that official borrowing costs should stay near zero until at least late 2014, when it announces its rate decision on Wednesday after a two-day meeting. Investors would be looking to see if there were any suggestions of an eventual third round of quantitative easing.
Two-year government bond yields were little changed at 0.26 percent and US 30-year government bond yields were flat at 3.09 percent.
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