Traders were hungry for new two-year debt issued by the U.S. Treasury Department.
The government auctioned off $35 billion in two-year notes Tuesday afternoon. The notes were priced to yield 0.34 percent, lower than the 0.345 percent that similar notes yielded on the open market.
The lower yield indicates that traders offered higher prices for the notes than the current market price. That's a sign of strong demand.
Demand for the benchmark 10-year Treasury note rose sharply after a relatively weak report on consumer sentiment. The yield on the 10-year note fell to 2.19 percent as of 3:30 p.m. Eastern time from 2.26 percent late Monday. Its price rose 56.3 cents per $100 invested.
Bond yields fall as demand for them increases.
In late trading the yield on the two-year note was 0.32 percent, down from 0.35 percent Monday.
The yield on the 30-year bond fell to 3.30 percent from 3.34 percent. Its price rose 75 cents.
The three-month T-bill paid a yield of 0.08 percent.