U.S Treasury debt price fell on Tuesday and yields rose from five-month lows amid perceptions that the market was slightly overbought and a report suggested the Federal Reserve may need to raise interest rates, according to Reuters. Traders said a statement from the Organisation for Economic Cooperation and Development that the Fed might need to resume tightening monetary policy to ensure price stability damped the market mood. The central bank left the fed funds rate steady at 5.25 percent last month, having raised it 17 times since June 2004. "A big part of it is that you had a decent short-cover rally on Friday afternoon and most members of the street think that the market is a bit overdone and so the first trade is usually a sell," said Ted Ake, head of bond trading at Mizuho Securities in New York. The Treasury market was closed on Monday for the Labor Day holiday. Benchmark 10-year Treasury notes were down 9/32 in price for a yield of 4.76 percent compared to 4.72 percent late on Friday. Yields, which move inversely to prices, have dipped to 5-month lows on expectations that the Fed would start cutting rates early next year given slowing economic growth. "The OECD numbers have rattled people a bit, especially the comments about U.S. rates which people were beginning to believe were on hold," said a trader in London. The interest rate-sensitive two-year note was down 2/32 in price for a yield of 4.79 percent. Traders said they expected Treasury prices to head lower during the session given a lack of data. "Unless there is decent buying this morning, we are probably going to go a little bit lower. There is no real news this week to drive us one way or the other," said Ake. Treasuries were little moved by the Challenger report showing that planned layoffs surged 76 percent to 65,278 in August from the previous month, signaling an early start to year-end cuts as companies start to implement 2007 payroll plans.