NEW YORK: US Treasury debt yields rose on Tuesday on growing expectations the Federal Reserve could change the language in its next monetary policy statement to flag a possible interest rate increase as early as June.
US 30-year bond yields climbed to seven-week peaks, while those for benchmark 10-year notes hit daily highs.
Concerns about Greece's debt negotiations and the conflict in Ukraine had triggered earlier safe-haven buying of Treasuries, but that dissipated in New York trading.
Some market participants suggested the latest sell-off in Treasuries may have also been triggered by news that the European Central Bank is unlikely to pull the plug on emergency funding for Greek banks this week despite a standoff between Athens and its international lenders, a person familiar with the situation said.
Talks between Greece and euro zone finance ministers over the country's debt crisis broke down on Monday when Athens rejected a proposal to request a six-month extension of its international bailout package as "unacceptable".
Greek Prime Minister Alexis Tsipras stressed on Tuesday that his government will not compromise.
"Even though there are concerns about Greece and Europe, that could be giving way to increased concerns that the Fed could begin tightening maybe as early as June," said David Coard, head of fixed-income sales and trading at Williams Capital in New York.
The Fed will release the minutes of its latest meeting on Wednesday, but many market participants don't expect much guidance about the timing of the US central bank's first interest rate increase since the global financial crisis.
Instead, investors are looking to Fed Chair Janet Yellen's congressional testimony next week for clearer indications about the probability of a June tightening.
In mid-morning New York trading, US 30-year bond prices fell 27/32 to yield 2.66 percent. Earlier in the session, US 30-year yields rose as high as 2.675 percent, the highest level since Jan. 5.
Benchmark 10-year notes were down 12/32 in price to yield 2.06 percent, up from 2.05 percent late on Monday.
Treasury yields have increased since US data two weeks ago showed robust jobs growth for January as well as a rise in wages, bolstering the view the Fed may have to lift interest rates sooner rather than later.
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