By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices rose and yields fell from their highest in two weeks on Tuesday as rating agencies highlighted fiscal problems in the U.K. and Portugal, making stocks and commodities less appealing to investors and raising the attractiveness of U.S debt.
Yields on 10-year notes (UST10Y 3.71, +0.04, +0.95%) fell 4 basis points to 3.68%. Bond yields move in the opposite direction as prices. A basis point is 0.01%.
Yields on 2-year notes (UST2YR 0.89, 0.00, -0.45%) dropped 3 basis points to 0.86%.
Fitch Ratings admonished the U.K. for its deficit-reduction plan as too slow and said Portugal could be downgraded, while Moody's Investors Service said it may downgrade some British banks. See story on U.K. ratings. See more on U.K. banks' ratings.
"The market really paid more attention to the ratings stories," said strategists at CRT Capital Group.
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With no major U.S. economic reports scheduled, attention will turn to the government's auction of $40 billion in 3-year notes (UST3YR 1.40, +0.00, +0.29%) later in the session. Bids are due at 1 p.m. Eastern.
Analysts also noted comments from Brian Sack, an official at the Federal Reserve. He said late Monday that any potential asset sales from the central bank's enormous holdings of mortgage-backed securities will be done gradually and in a passive manner.
