NEW YORK: US Treasury yields remained elevated on Wednesday in response to higher German Bund yields, while traders' uncertainty on whether the Federal Reserve would hike rates Thursday also kept US yields high.
German Bund yields shot higher for a second day, with benchmark 10-year Bund yields hitting a nearly two-week high of 0.80 percent.
The continued move higher was largely a result of new supply entering the market during thin trading.
US two-year note yields, by comparison, hovered close to the session peak of 0.82 percent, which marked the highest yield since April 2011.
US 30-year bond yields, meanwhile, earlier in the session hit a more than eight-week high of 3.08 percent.
The bulk of the move higher in US yields occurred Tuesday, when a rise in German Bund yields triggered investor skittishness about whether the Fed will hike rates for the first time since 2006 on Thursday.
The Fed's two-day policy meeting starts Wednesday.
Analysts said that uncertainty regarding the Fed's actions has shaken traders' confidence, leading them to sell more quickly when they observe a general move higher in yields.
"If you see rates rising, you may want to start lightening a bit, so in the event that (the Fed hikes rates), you don't get hurt as much," said Priya Misra, head of global rates strategy at TD Securities in New York.
Analysts said that traders still expect the Fed to hike rates this year, with Thursday remaining an option.
Fed rate hikes are expected to hurt Treasuries prices, which move inversely to yields.
"There was a sudden realization that tomorrow is very much alive, in terms of a Fed tightening," said Neil Bouhan, government bond strategist at BMO Capital Markets in Chicago.
Analysts said data Wednesday showing US consumer prices unexpectedly fell in August may have supported some views that the Fed would not hike rates Thursday, and as a result likely capped the rise in US yields.
US two-year notes were last mostly flat in price to yield 0.79 percent, from a yield of 0.8 percent late Tuesday. Benchmark 10-year notes were mostly flat in price to yield 2.28 percent, roughly unchanged from late Tuesday.
US 30-year bonds were last down 2/32 in price to yield 3.07 percent, from a yield of 3.06 percent late Tuesday.
On Wall Street, the benchmark S&P 500 stock index was last up 0.24 percent.