Oil prices also sagged, ending a three-day rally, with Brent crude down $1 as U.S. inventories rose in a possible sign of weakening demand.
April U.S. consumer price data is due at 1230 GMT and economists expect the headline CPI to hold steady at an annual 5% and core CPI to moderate very slightly to 5.5%, though anything stickier could confound bets interest rates will fall. "That's the thing that'd get taken out if CPI numbers come in on the higher side," said ING economist Rob Carnell.
"It doesn't look particularly sensible if inflation is falling at too slow a rate and that could feed through into higher longer-term treasury yields as well." Interest rate futures imply about a 60% chance the Federal Reserve cuts rates in September, according to theTreasuries were broadly steady, with brinkmanship over the approaching U.S. debt ceiling fuelling demand for safe assets, including bonds, on one hand, while also driving investors out of T-bills maturing in early June.to break a deadlock over raising the $31.4 trillion U.S.