After coming under pressure in early trading on Tuesday, treasuries regained some ground over the course of the session but still ended the day modestly lower.
Bond prices climbed well off their worst levels but remained stuck in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day up by 1.1 basis points at 2.182 percent after reaching a high of 2.218 percent.
The early weakness among treasuries came following the release of a report from the Commerce Department showing a notable rebound by housing starts in the month of May.
The report said housing starts climbed 6.8 percent to a seasonally adjusted annual rate of 914,000 in May from the revised April estimate of 856,000. The increase in housing starts came following a 14.8 percent drop in the previous month.
While housing starts came in well below economist estimates, the increase may have added to recent concerns about the outlook for the Federal Reserve's stimulus program.
A separate report from the Labor Department showed a modest increase in consumer prices in the month of May, with the slight increase largely reflecting higher shelter costs.
The subsequent recovery attempt by treasuries came as traders looked ahead to the outcome of the Federal Reserve's monetary policy meeting on Wednesday.
While the Fed is not expected to announce an immediate change in policy when it releases its post-meeting statement on Wednesday, traders will be looking for any signals regarding when the central bank will scale back its asset purchase program.
The Fed is due to make its monetary policy announcement at about 2 pm ET on Wednesday, followed by Fed Chairman Ben Bernanke's accompanying press conference.
For comments and feedback: editorial@rttnews.com