The yield curve steepened a tad from its flattest level in a decade as traders await the US Senate version of a proposal to rewrite the federal tax code, which might add significantly to future government borrowing to finance possibly steep tax cuts.

The Republican-backed bill from the Senate is expected to be released later on Thursday, while the 30-year bond auction is scheduled for 1 p.m. (1800 GMT).

"For the auction we believe many will await their set-ups until after details from Washington on taxes are released," Cantor Fitzgerald Treasury strategist Justin Lederer wrote in a research note.

At 10 a.m. (1500 GMT), the 10-year Treasury note yield traded at 2.331 percent, up 1 basis point from late on Wednesday when it hit a near three-week trough of 2.304 percent.

The 30-year bond yield rose 1.6 basis points to 2.800 percent, not far from a near six-week low of 2.765 percent set on Tuesday.

The two-year yield was unchanged at 1.645 percent.

The yield spread between two-year and 10-year Treasuries hit a fresh decade-tight level of 65.9 basis points earlier on Thursday, before steepening to 68.0 basis points, Reuters data showed.

Traders have favored longer-dated Treasuries over shorter-dated issues over the past couple of weeks, as they anticipate further rate increases from the Federal Reserve and domestic inflation remaining below the Fed's 2 percent goal, analysts said.

Uncertainty about whether Republicans in Congress will pass tax cuts and other changes to the US tax code, and a diminished likelihood that the government will introduce a Treasury bond that matures beyond 30 years have made such "curve-flattener" trades more appealing, they said.

"What had lifted yields earlier had faded," said Stephen Gallagher, head of US research at Societe Generale in New York.