Treasury yields recovered after weakening on June inflation data.

Market watchers expect the 10-year Treasury’s yield to fall to 4.18 percent in a year, from 4.28 percent currently.

Most U.S. stocks are falling on Tuesday after an update on inflation hurt Wall Street's hopes for lower interest rates. Fed Chair Jerome Powell, though, has been adamant that he wants to wait for more data about how tariffs affect the economy and inflation.

The US budget legislation is expected to worsen the country's fiscal outlook without boosting economic growth.

The average rate on 30-year fixed home loans decreased to 6.67% for the week ending July 3, down from 6.77% last week.