Treasurys were little changed on Wednesday, recovering from earlier losses as the size of the government's stimulus package grew to nearly $900 billion.
Traders are also focused on what the Federal Reserve will say when the central bank ends its policy meeting later on.
Yields on the two-year note , which move inversely to the price, rose 1 basis point to 0.88%. A basis point is 0.01%.
Ten-year note yields ) were little changed at 2.53%.
A larger spending plan leads to more debt issuance, making investors demand higher yields.
President Barack Obama's stimulus proposal may be voted on by the House of Representatives later Wednesday. See story on stimulus plan.
Reports that the government is moving closer to creating a "bad bank" to buy up toxic assets that have wreaked havoc on the global financial system may also reduce investors' desire for the relative safe-haven status of U.S. debt.
Declines may be limited by recognition that the Treasury Department received strong demand on Tuesday at its auction of a record $40 billion in two-year notes.
Treasurys of most maturities rallied after the auction, with 10-year note yields falling for the first time in seven days.
"The bid for the safest assets the world can tap is still very much in demand and that will likely continue throughout most of 2009," said Kevin Giddis, managing director of fixed income for Morgan Keegan & Co. "The current economic conditions are still suffering from misanalysis and not factoring in enough pain."
Waiting for the Fed
Analysts don't expect any change to the Fed's target interest-rate range or economic outlook, released in a statement due at 2:15 p.m. Eastern time.
"There is no chance that the Fed can do anything other than reiterate continued economic weakness and diminishing inflation going forward" or a commitment for a zero interest-rate policy," said David Ader, head of government bond strategy at RBS Greenwich Capital.
Instead, interest is focused on what details may come out of the Fed's plan to buy securities backed by consumer and small-business loans or possibly Treasurys.
While the hope of the Fed buying long-term Treasurys has been credited with keeping yields near their historic lows, others say it makes more sense for the central bank to continue buying other types of assets that have struggled to find buyers.
"We don't think Treasury rates are an issue inhibiting a recovery directly," Ader wrote in an e-mail. "The Fed's bullets would be better spent buying credit and mortgage stuff to bring real lending rates down."
