Interest rates fell on the bond market as investors snapped up government debt following a drop in the number of people preparing to buy homes.
The drop in pending home sales for November caused concerns that the economy could give up some of the improvements it has been making.
Investors remained cautious following the mixed reports and ahead of reports later in the week on employment and the service industry. A cautious tone in the stock market Tuesday also stoked demand for the safety of Treasurys. Bond yields were falling as their prices rose.
The yield on the 10-year Treasury note, which is tied to interest rates on mortgages and other consumer loans, fell to 3.76 percent in late trading from 3.83 percent late Monday. Its price rose 14/32 to 96 26/32.
Analysts said the drop in housing contracts came as home buyers rushed in the fall to meet a deadline for a federal tax credit that had been set to expire. The credit was later extended and expanded.
Still, the 16 percent month-to-month slide in the National Association of Realtors' index of sales agreements for November rattled some investors, leading them to park money in safe investments like Treasurys. The decline ended a nine-month recovery in the key indicator for the housing market.
The yield on the 30-year bond fell to 4.61 percent from 4.65 percent as its price rose 14/32 to 96 5/32.
In other trading, the yield on the two-year Treasury fell to 1.03 percent from 1.08 percent, while its price rose 3/32 to 99 30/32.
The yield on the three-month T-bill fell to 0.05 percent from 0.07 percent. Its discount rate stood at 0.06 percent.