Traders on Tuesday sent longer-term US Treasury yields to their lowest in more than a month after a report showed small business owners less confident, and narrowing the spread of a closely watched part of the yield curve.

The benchmark 10-year yield was down 4 basis points at 1.5297% in morning trading. It reached as low as 1.513%, its lowest since May 7.

Guy LeBas, chief fixed income analyst for Janney, said the dip seemed driven by a survey from the National Federation of Independent Business showing small business confidence declined in May for the first time in four months amid concerns about the availability of labor.

Other reports including one on job openings due later in the morning could show more details than the NFIB survey which, LeBas said, can be pessimistic and "sees dragons everywhere."

The bond buying pushed down a closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations. It was at 137 basis points, about four basis points lower than Monday's close, and also the lowest since May 7.

The 10-year TIPS yield was at -0.854% and the breakeven inflation rate was at 2.374%, the lowest since late April.

Traders will watch the results of a $58 billion auction of 3-year Treasury notes due in the early afternoon.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was down less than a basis point at 0.1527%.