NEW YORK: US Treasury yields rose on Wednesday, with 30-year yields hitting one-week highs after solid US economic data supported views of a swift pace of Federal Reserve rate increases next year and gains in oil prices suggested higher inflation.
Yields on 30-year government debt reached a one-week high of 3.009 percent, while yields on Treasuries maturing between 5 and 10 years hit nearly one-week highs after Commerce Department data showed US personal income rose 0.3 percent last month to mark an eighth straight month of solid wage gains.
Wages and salaries rose 0.5 percent, adding to a 0.6 percent gain in October.
"We've been in somewhat of a down cycle in economic numbers, and they are starting to gather a little bit of steam," said Ellis Phifer, market strategist at Raymond James in Memphis, Tennessee.
He said the data put a dent in the notion that the Fed would delay hiking rates further next year, and that the rise in yields suggested traders may be adjusting to the possibility of more rate hikes than previously expected.
As of last week, Fed policymakers' median projected target interest rate for 2016 remained 1.375 percent, implying four quarter-point hikes next year.
Gains in US crude oil prices, which hit their lowest levels since 2009 on Monday, put selling pressure on 30-year Treasuries and sent their yields higher. The gains in crude prices suggested more inflationary pressure.
Expectations for higher inflation tend to push 30-year yields higher since inflation erodes the interest payouts on those bonds. Bond yields move inversely to prices.
The higher 30-year yields contributed to a rise in shorter- and medium-term yields, said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York.
Analysts said trading volume remained thin ahead of the Christmas holiday.
Benchmark 10-year US Treasury notes were last down 7/32 in price to yield 2.266 percent, from a yield of 2.239 percent late Tuesday and not far from a nearly one-week high of 2.273 percent hit after the US data.
US five-year notes were down 2/32 in price to yield 1.719 percent, from a yield of 1.706 percent late Tuesday and hovering near a nearly one-week high of 1.731 percent.
US two-year notes were mostly flat in price to yield 0.985 percent, from a yield of 0.977 percent late Tuesday.
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