US Treasury yields rose on Monday after Japan prepared a new round of stimulus, boosting stocks and reducing demand for safe-haven US bonds, and after the US government sold new three-year notes to tepid demand.
Japanese Prime Minister Shinzo Abe ordered new stimulus, but did not give details, causing Japanese stocks to jump and the yen to weaken.
Risk appetite was also bolstered by news that former Federal Reserve Chairman Ben Bernanke visited the Bank of Japan.
Some investors have speculated that Bank of Japan Governor Haruhiko Kuroda might decide to provide "helicopter money" - a term coined by economist Milton Friedman and cited by Bernanke, before he became Fed chairman, as a way to finance government budgets and fight deflation.
"There was some news that Bernanke was visiting the BOJ, which was more than enough to drive a big rally in risk," said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York.
Benchmark 10-year notes ended down 21/32 in price to yield 1.434 percent, up from 1.365 percent late on Friday.
Higher yields were not enough to entice some buyers to the US Treasury Department's $24 billion sale of three-year notes, the first part of $56 billion in new coupon-bearing supply this week.
The notes sold at a high yield of 1.765 percent, just under a basis point above where the debt had traded before the sale.
The ratio of bids to the notes offered was 2.69, the lowest since July 2009.
Three-year notes are highly sensitive to interest rates, and Monday's sale was likely hurt by rising expectations that the Fed may raise rates later this year, after Friday's employment report for June showed a gain of 287,000 jobs.
That may help demand for Tuesday's $20 billion sale of 10-year notes and Wednesday's $12 billion auction of 30-year bonds.
Thirty-year bond yields fell to record lows of 2.089 percent in overnight trading, before rising back to 2.141 percent.