NEW YORK: US Treasury yields rose on Wednesday as stronger-than-forecast results from two major US banks lifted Wall Street to one-month highs and British Prime Minister Theresa May's win of a confidence vote, reducing safety bids for US government debt.
Rising supply of corporate bonds also lifted Treasury yields, as dealers sold Treasuries to lock in interest rates on the debt they underwrote.
The $15.6 trillion sector has been trading in a choppy fashion since late 2018 due to stock market volatility and investor bets that the Federal Reserve might pause in raising short-term US interest rates.
"The bond market is being held hostage by stock market moves and Fed speak," said Mary Anne Hurley, vice president of fixed income at D.A. Davidson in Seattle.
US-China trade tensions, the long federal government shutdown and uncertainty over Brexit have also weighed on investor sentiment.
Wall Street's major indexes hit one-month highs as Goldman Sachs and Bank of America posted strong results.
The yield on benchmark 10-year Treasury notes was up 1.7 basis points at 2.725 percent. It has risen from a near one-year low of 2.543 percent reached a week and a half earlier.
U.K. Prime Minister Theresa May clung to leadership after a crushing defeat of her Brexit deal. Now she can work on another proposal for Britain to leave the European Union by late March, but it remains unclear whether she can reach a deal with Brussels that other British lawmakers would accept.
Two-year US Treasury yields, which are sensitive to views on Fed policies, were 1.8 basis points higher at 2.547 percent. Nearly two weeks ago, they touched 2.372 percent, which was the lowest level since May 30.
Fed officials including Chairman Jerome Powell have signaled in recent days that the US central bank is willing to be patient before raising interest rates again.
The Fed's latest Beige Book, a snapshot of regional economic conditions, showed labor markets tightened in early January, but businesses grew more worried about market volatility, trade tension and rising interest rates.
On the supply front, companies raised about $6 billion with investment-grade bond issues on Wednesday, bringing the month-to-date issuance over $60 billion, according to IFR.
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