US President Donald Trump said on Monday that Washington was not ready to make a deal with China, but he expected one in the future. At the same time, he pressed Japanese Prime Minister Shinzo Abe to reduce Japan's trade imbalance with the United States.

The European Commission could impose a 3 billion euro ($3.36 billion) fine on Italy for breaking EU rules due to its rising debt and structural deficit levels, the country's Deputy Prime Minister Matteo Salvini said on Tuesday.

Salvini, whose far-right League party triumphed in European elections on Sunday, said he would use "all my energies" to fight what he said were outdated and unfair European fiscal rules.

"It's very much the usual suspects in terms of the drivers behind the risk off sentiment," said Ian Lyngen, head of US rates strategy at BMO Capital Markets in New York.

Concerns about global growth, in part due to international trade tensions, and tepid inflation has led investors to price in the possibility that the Federal Reserve will cut rates this year.

Interest rate futures traders are pricing in an 80 percent chance of a rate cut by December, according to the CME Group's FedWatch tool.

Bond yields came off their lows reached overnight before the Treasury Department is due to sell $40 billion in two-year notes, and $41 billion in five-year notes on Tuesday.

It will also sell $32 billion in seven-year notes on Wednesday.