NEW YORK: US Treasury prices were little changed on Wednesday with the two-year yield hitting a three-week high, as traders waited for possible clues on the timing of an interest rate increase from the Federal Reserve.
The US central bank is scheduled to release the minutes of its July 26-27 policy meeting at 2 p.m. (1800 GMT).
"We are just waiting for the minutes," said John Canavan, market strategist at Stone & McCarthy Research Associates in Princeton, New Jersey.
The Fed's July minutes come after comments by two top Fed policymakers on Tuesday that rekindled bets the Fed may raise interest rates by year-end if the economy improves further.
New York Fed President William Dudley told the Fox Business Network that he thought it was possible for the Fed to hike rates at its Sept. 20-21 policy meeting.
Atlanta Fed President Dennis Lockhart said the US economy is likely to be strong enough for at least one interest rate increase before the end of 2016, with two hikes possible.
Dudley's remarks in particular led traders to reduce their shorter-dated Treasuries holdings, which are vulnerable if the Fed raises rates, following its first hike in nearly a decade in December.
Interest rate futures implied traders saw a 54 percent chance the Fed would raise rates at its Dec. 13-14 policy meeting, versus 52 percent on Tuesday, according to CME Group's FedWatch program.
The two-year yield, which is sensitive to traders' views on Fed policy, was up fractionally at 0.754 percent after touching a three-week peak at 0.766 percent earlier Wednesday, according to Reuters data.
"It's the aftermath of the hawkish comments from Dudley," Canavan said.
Shorter-dated Treasuries lagged longer-dated issues on the view that further rate increases from the Fed would hurt them more as long-term inflation has remained muted.
Benchmark 10-year Treasury notes were up 2/32 in price to yield 1.568 percent, down about 1 basis point from Tuesday.
An hour before the release of the FOMC minutes, St. Louis Fed President James Bullard is due to speak about the US economy at a conference in St. Louis, Missouri.
On July 15, Bullard said he expected the Fed would raise rates only once in 2016 and would remain on hold in 2017 and 2018 as the economy would grow at a modest 2 percent pace this year.
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