Government bond prices fell Tuesday after a report showed that warehouse inventories rose in March.
The price of the 10-year Treasury note fell 43 cents per $100 invested in late trading. Its yield, which moves in the opposite direction, rose to 3.22 percent from 3.15 percent late Monday.
The Commerce Department said Tuesday that wholesale companies increased their stockpiles for the 15th straight month in March, an indication they expect an increase in sales. Supply levels at warehouses rose 1.1 percent in March, while sales among wholesalers grew 2.9 percent and have risen in eight of the last nine months.
Investors tend to seek riskier assets when the economy appears on firmer footing.
Traders appeared to shrug off good demand for three-year notes in the Treasury's $32 billion auction Tuesday.
The Treasury Department paid a yield of 1 percent compared with 1.25 percent it paid for the previous three-year note auction last month. Investors placed bids for 3.29 times the amount offered, higher than the 3.25 ratio at the prior auction.
The three-year note's yield was 0.98 percent in late trading Tuesday.
In other trading, the 30-year bond fell 63 cents per $100 invested, while its yield rose to 4.35 percent from 4.31 percent. The yield on the two-year note increased to 0.60 percent from 0.55 percent.
The three-month Treasury bill paid a 0.02 percent yield. Its discount was 0.03 percent.