Bonds usually find the going tough when stocks perform well, and that was especially so on Tuesday when there were no major data releases to spur trading. Traders also awaited Thursday's announcement of next week's bond auction volumes. "For the most part we're looking at stocks this week," said Suvrat Prakash, US interest rate strategist at BNP Paribas in New York. "For the most part, there's just not much action, there is no top-tier data this week. The main event for Treasuries looks to be Thursday morning with the supply announcement," he added.
The benchmark 10-year Treasury note lost 5/32 in price to yield 3.70 percent, up from 3.68 percent late Friday. Earlier in the session, 10-year yields briefly fell to 3.64 percent, their lowest since December 21. Massachusetts voters streamed to the polls in large numbers on Tuesday in a cliff-hanger election for a new US senator that could derail Democrats' dominance in Washington and scuttle President Barack Obama's top priority of sweeping healthcare reform.
What looked likely weeks ago to be a Democratic shoo-in to replace late party icon Edward Kennedy has turned into a desperate effort by Democrats after a last-minute surge by the Republican in the race, state Senator Scott Brown. Latest opinion polls suggest Brown could defeat state Attorney General Martha Coakley, and take away the Democrats' 60-vote supermajority in the Senate, which enables them to overcome Republican procedural roadblocks.
Treasuries earlier declined in sympathy with UK gilts on news of stronger-than-expected inflation reading in Britain. However, data on Friday showed US consumer price inflation was tame. The 30-year long bond fell 5/32 in price, yielding 4.59 percent compared with 4.58 percent on Friday.