Government bond prices fell sharply, pushing yields to their highest levels since mid-December as the market saw it as highly likely the Reserve Bank would resume monetary tightening by yearend.

The yield on the benchmark three-year bond jumped 10 basis points to 6.945 percent, its highest level since Dec. 15 according to Reuters data.

The 14-year paper climbed 11 basis points to 8.545 percent.

Local debt has sold off strongly since last week, when slightly more hawkish remarks on rising inflation by Reserve Bank Governor Gill Marcus, who is generally seen as dovish, got market players thinking interest rates could start rising after being kept on hold for nearly 1-1/2 years.

"Right now the market is looking for a hike in the next nine months, so looking to December the market is now fully priced for a 50 basis point hike from the Reserve Bank," ETM market analyst Chris Becker said.

"We've seen that in the forward rate agreements market as well, which has picked up and was paid quite nicely today. In six months' time we're looking at about a 60 percent chance that we'll see a rate hike."

The bond sell-off also weighed on the rand, which fell as much as 1.1 percent to a session low of 7.6407 against the dollar, its softest level since Friday.

The rand traded at 7.6237 to the dollar at 1550 GMT, down 0.99 percent from Monday's close of 7.5432, as concerns that growth is stalling in China hit it and other commodity currencies.