Treasuries initially extended the rally seen in the previous session but turned lower over the course of the trading day on Tuesday.
Bond prices pulled back well off their early highs and ended the day moderately lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.8 basis points to 1.209 percent after hitting a low of 1.128 percent.
The pullback by treasuries may partly have reflected profit taking after the ten-year yield fell to its lowest intraday level in well over five months.
A rebound on Wall Street also contributed to the downturn by treasuries, with stocks regaining ground following the sell-off seen on Monday.
In U.S. economic news, the Commerce Department released a report showing a substantial increase in new residential construction in the month of June.
The Commerce Department said housing starts spiked by 6.3 percent to an annual rate of 1.643 million in June after jumping by 2.1 percent to a revised rate of 1.546 million in May.
Economists had expected housing starts to increase by 1.1 percent to a rate of 1.590 million from the 1.572 million originally reported for the previous month.
Meanwhile, the report showed building permits tumbled by 5.1 percent to an annual rate of 1.598 million in June after slumping by 2.9 percent to a revised rate of 1.683 million in May.
Building permits, an indicator of future housing demand, had been expected to climb by 1.1 percent to a rate of 1.700 million from the 1.681 million originally reported for the previous month.
Trading activity may be somewhat subdued on Wednesday amid a quiet day on the U.S. economic front, although bond traders are likely to keep an eye on the results of the Treasury Department’s auction of $24 billion worth of twenty-year bonds.