NEW YORK (CNN/Money) - Bond prices fell on Tuesday, breaking four days of gains, as the government sold $22 billion of new five-year notes just as investors were dumping safe-haven bonds and chasing a Wall Street rally.

Around 3:30 p.m. ET, two-year notes were off 13/32 at 100-9/32, yielding 2.10 percent, a whopping 20 basis points higher than Monday's 1.90 percent record close. Five-year notes were off 29/32 to 104-21/32, yielding 3.31 percent. Newly-auctioned fives yielded 3.38 percent, 3 basis points above their sale yield.

Benchmark 10-year notes were down 1-8/32 at 103-29/32, yielding 4.39 percent, up from a nine-month trough struck on Monday at 4.21 percent, while the 30-year bond fell 1-11/32 to 101-26/32 for a yield of 5.25 percent.

Shorter-dated securities suffered one of their worst sell-offs of the year just a day after two-year note yields -- yields move inversely to prices -- registered a new all-time closing low since these maturities were first sold in 1972.

Expectations in the market that the Federal Reserve may cut benchmark interest rates -- which have helped drive short-term yields down to historic lows in recent days -- remained built into sentiment. That led to many analysts chalking up Tuesday's Treasury sell-off as a one-day event.

"Bonds are taking their cue from stocks, though I'm not sure anyone believes this is anything more than a fleeting bounce for equities," said Michael Ryan, fixed-income strategist at UBS PaineWebber.

Treasury sold $22 billion of new five-year notes at a high yield of 3.348 percent, a record low yield for sales of this maturity, which have been sold since the early 1960s.

The bid to cover ratio -- a measure of demand for a sale that expresses the amount bid against the amount of bonds offered -- was 1.76. That compares with the average of 2.04 over past two years, albeit with smaller sized sales. The last $22 billion five-year sale had a bid to cover ratio of 1.72 but then yields were more than 100 basis points higher.

"The stock market is having a very good day today and yields have backed up," said James Caron, fixed income strategist at Merrill Lynch Government Securities. "But I don't think it's changed a lot of people's longer term view."

In the currency market, the dollar surged as U.S. funds burned 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.

Around 3:30 p.m. ET, the euro bought 96.47 U.S. cents, down from 98 cents Monday, while the dollar bought ¥120.95, 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