U.S. Treasury yields moved lower on Tuesday as investors adopted a cautious stance ahead of several key economic reports due later this week, including closely watched inflation data that could provide further clues on the Federal Reserve's policy outlook.

The benchmark 10-year Treasury yield fell more than 2 basis points to 4.526%, while the 2-year Treasury yield, which is particularly sensitive to expectations for interest rates, declined over 3 basis points to 4.126%. The 30-year Treasury bond yield also edged lower to 5.003%.

The decline in yields followed Monday's session, when bond markets came under pressure after stronger-than-expected U.S. employment data reinforced expectations that the economy remains resilient despite elevated borrowing costs. The latest labour market figures prompted investors to reassess the likelihood of future Federal Reserve rate cuts, contributing to higher yields at the start of the week.

On Tuesday, attention shifted to fresh economic indicators. Existing home sales rose 3.2% in May from the previous month to an annualised pace of 4.17 million units, exceeding economists' expectations. The improvement was supported by a modest decline in mortgage rates during April, which encouraged buyer activity after several months of subdued demand.

Investors also reviewed the latest U.S. trade data, which showed the goods and services deficit narrowed to $55.9 billion in April, slightly below market forecasts. The smaller trade gap suggested external trade could provide some support to second-quarter economic growth.

Market participants continue to monitor the broader economic outlook, particularly the impact of higher energy prices and ongoing geopolitical tensions in the Middle East. With inflation data due later this week, Treasury markets are likely to remain sensitive to any developments that could influence expectations for future interest rate decisions.

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