"They've been selling bonds to adjust and hedge some positions," said Dan Heckman, fixed income strategist at U.S. Bank Wealth Management. "Right now there's a lot of uneasiness of where the Fed is going."
Bank of America Merrill Lynch's Global Broad Market Index measures the performance of international investment-grade debt and showed a $150 billion loss in value between last Monday and Tuesday.
However, demand was strong for both the $24 billion auction of three-year notes on Tuesday and Wednesday's $24 billion of 10-year notes. Thursday's $16 billion, 30-year bond auction is the last sale for the week.
Stocks closed narrowly mixed on Wednesday in what some analysts called an "adjustment period."
"For stocks, the markets are trying to adjust to the back up in yields and handicap whether or not it's going to be threatening to ... corporate profits," said Jeremy Zirin, head CIO investment strategist at UBS Wealth Management Americas. "From a fundamental perspective it's hard to justify yields above current levels."
On Wednesday, the U.S. 10-year Treasury yield traded near 2.29, off Tuesday's peak of 2.366 percent. The 30-year yield was at 3.08 percent, below its six-month high of 3.128 percent.
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The Dow Jones industrial average ended down 7.74 points, or 0.04 percent, at 18,060.49. The S&P 500 closed down 0.64 point, or 0.03 percent, at 2,098.48. Only the Nasdaq closed higher, up 5.5 points, or 0.11 percent, at 4,981.69 as Apple, Microsoft and other tech stocks gained.
"The S&P 500 remains within reach of its breakout level at 2,126," S&P Capital IQ's Sam Stovall said in a note late Wednesday. "Upon a break higher by the S&P 500, the Russell 2000 should offer confirmation that a larger leg higher in stocks is underway."
Earnings expected Thursday include retailers Kohl's and Nordstrom.