CHICAGO: US Treasury yields fell on Tuesday as the market reversed direction from Monday's uptick in yields and traders looked for stronger signs of the economy's path through the COVID-19 pandemic.
The benchmark 10-year yield was last down 2.2 basis points at 0.6318%.
"The market's just erasing some of yesterday's underperformance," said Justin Lederer, Treasury analyst at Cantor Fitzgerald in New York, referring to Monday's rise in yields despite strong note auctions.
He added that the market is range-bound despite the surge of supply heading its way as the US government finances costly stimulus measures aimed at combating the fallout of the coronavirus outbreak.
"We go up a few days, we go down. We steepen. We flatten. But net net it's kind of been just hovering around these levels even with increased supply and the (Federal Reserve) tapering purchases," Lederer said.
The Fed is slowly reducing its purchases of Treasuries to an average of $15 billion per day last week from a peak of $75 billion per day from March 19 to April 1.
After a strong showing for the sale of $42 billion of two-year and $43 billion of five-year notes on Monday, the US Treasury will offer $35 billion of seven-year notes on Tuesday.
Meanwhile, the Fed begins its two-day policy meeting on Tuesday.
The central bank could begin to clarify how long it intends to leave rates near zero and could offer a glimpse of how the policy-setting Federal Open Market Committee feels the economy will evolve.
The two-year US Treasury yield, which typically moves in step with interest rate expectations, was last down 2.9 basis points to 0.2013%.
In repurchase agreement (repo) operations, no bids were submitted for an overnight operation, according to the New York Federal Reserve's website.