10-year yield hits highest since Nov 2014

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U.S. benchmark Treasury debt yields rose to their highest since November on Wednesday, bolstered by a solid U.S. private sector employment report for May and gains in German bond yields after the European Central Bank raised its inflation forecast for this year.

Yields on the U.S. 10-year note hit a high of 2.38 percent—its highest since November 14—compared to a yield of 2.265 percent late on Tuesday.

The yield eased to 2.35 percent after the Federal Reserve's Beige Book showed U.S. economic activity expanded from early April to late May and growth was expected to continue at a "modest" to "moderate" pace against the backdrop of declining oil and gas investment.

Read MoreFed survey: 'Generally optimistic' about growth

In the report, which provides anecdotal information on business activity collected from contacts nationwide, the U.S. central bank said most of its regional Fed banks reported that while manufacturing had either held steady or increased, growth was tempered by the downturn in the oil and gas industry.

Yields on ten-year German bunds jumped to 0.8 percent, the highest since late October last year.

"We're tracking the Bund market right now," said Justin Lederer, Treasury strategist, at Cantor Fitzgerald in New York.

ECB President Mario Draghi on Wednesday reaffirmed the bank's commitment to quantitative easing, but what caught the market's attention was the upward revision in inflation forecasts.

After leaving interest rates at a record low 0.05 percent, the ECB raised its inflation forecast to 0.3 percent for this year, having previously put it at zero, saying its trillion-euro-plus asset buying program was paying off but had to be seen through.

"All in all, the ECB's quantitative easing has arrested deflation risk but it remains cautious on the success of its current stimulus measures with respect to addressing downside risks to medium-term stability," Lena Komileva, chief economist, director at G+ Economics in London.

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Separately, a decent report on U.S. private sector employment also underpinned the U.S. government bond yields. Data showed U.S. private employers added 201,000 jobs in May, compared with a downwardly revised 165,000 jobs in April. The report by ADP payroll processor showed the jobs increase was largest since January.

Read MoreWarm up act to the jobs report

U.S. Treasury yields edged higher following the release of the jobs data.

In afternoon trading, U.S. 30-year Treasurys were last down more than a point in price to yield 3.094 percent, from a yield of 3.016 percent late Tuesday. Thirty-year bond yields hit a three-week high of 3.096 percent.

A report showing that the pace of growth in the U.S. service sector had slowed in May hardly made a dent on U.S yields.

The Institute for Supply Management said its services index fell to 55.7 from 57.8 in April. Analysts were looking for a reading of 57.0 in May, according to a Reuters survey.