Treasury prices edged up Tuesday despite an increase in April car sales and an upbeat factory orders report.
The price of the 10-year Treasury note rose 18.7 cents per $100 invested in late trading. Its yield, which moves in the opposite direction, fell to 3.26 percent from 3.28 percent late Monday.
Automakers reported that smaller cars sold well in April as gas prices neared $4 a gallon. Analysts expect auto sales to rise by 19 percent from last year.
In a separate report, the government said businesses increased their factory orders in March for the fifth straight month.
Even so, traders expect the Federal Reserve will maintain its current policy of keeping interest rates low to spur the economy.
Investors will factor in new supply of notes and bonds on Wednesday when the Treasury announces how much of three-year and 10-year notes and 30-year bonds it will auction off next week.
"I wouldn't be surprised if the bond market starts to run out of steam soon," said Josh Stiles, analyst at IDEAGlobal.com.
Traders also are looking toward April's employment data due out Friday. An increase in hiring that exceeds expectations over the next several months could prompt the Fed to change its monetary policy, Stiles said.
In other trading, the price of the 30-year bond rose 46.8 cents per $100 invested, while its yield fell to 4.35 percent from 4.38 percent. The yield on the two-year note edged up to 0.61 percent from 0.60 percent.
In the market for short-term Treasury bills, the three-month T-bill paid a 0.01 percent yield. Its discount was 0.03 percent.