NEW YORK (CNN/Money) - Short-dated U.S. Treasury yields backed away from record lows Tuesday as stocks seemed to steady and the market braced for a flood of new bond supply.

At 9:20 a.m. ET, two-year notes fell 7/32 of a point to 100-15/32, yielding 1.99 percent, and five-year notes dipped 15/32 of a point to 105-3/32, yielding 3.20 percent.

Benchmark 10-year notes slid 23/32 of a point to 104-14/32, yielding 4.30 percent, while 30-year bonds dropped 25/32 of a point to 102-11/32, yielding 5.21 percent.

A rally by U.S. stock futures suggested equities could regain some of the large losses suffered Monday, and that was enough to prompt profit-taking on bonds.

Some investors were also clearing the decks to make way for $40 billion in new five- and 10-year paper being sold by Treasury later Tuesday and Wednesday.

"Stocks are up so bonds are down -- doesn't take a Ph.D. to call the market these days," said a trader at a U.S. primary dealer.

Still, he could find no fundamental reason for equities to recover and wrote it off as a technical bounce from an oversold position. Much now depends on how the market reacts to results from leading Internet gear maker Cisco (CSCO: Research, Estimates), due after the close Tuesday.

"As for the auction, it's hard to see people rushing to buy five-years when the yield is the lowest it's been in many of their lifetimes," said the trader. "But it should go well enough, given all the talk of recession and emergency rate cuts from the Fed."

A string of disappointing U.S. economic data recently has shaken confidence in the recovery and led the market to suspect the Federal Reserve might have to ease monetary policy again.

That view helped push two-year yields down to a record closing low of 1.90 percent Monday, though they had backed up by Tuesday morning.

Weaker-than-expected GDP, manufacturing, services and employment numbers in recent days have even stirred whispers of a double-dip recession, though most analysts still doubt it.

"The Treasury refinancing will be a test of investor appetite," said Adam Chester, chief economist at HBOS Group Treasury in London. "I think the auction will go well as there are still funds that would prefer to hold bonds instead of equities even though yields are at low levels."

In the currency market, the dollar surged as U.S. funds burnt by heavy equity losses pulled money home, and as investors started pricing in the possibility that the Federal Reserve could cut interest rates as soon as next week.

At 9:20 a.m. ET, the euro bought 96.81 U.S. cents, down from 98 cents Monday, while the dollar bought ¥120.66, up from ¥119.73 Monday.

Dealers said investors had tired of holding positions betting on more losses in the dollar, in the face of its resilience to yet another fall on Wall Street, and that the greenback's gains accelerated as key chart levels were pierced.

"We've seen model funds, hedge funds just seem to give in. It started with dollar buying against the peripheral currencies and it's moved out into the euro and the yen," said a foreign exchange salesman at a U.S. bank.  

-- from staff and wire reports