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Treasury yields hold to session highs on Fed

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Bond yields held to session highs on Wednesday after the Federal Reserve announced that it will taper another $10 billion without shedding much light on when it would start raising its benchmark short-term interest rate.

Benchmark 10-year notes dropped 25/32 in price after the Fed announcement to yield 2.55 percent, its highest yield since July 16.

The 30-year bond fell 1 15/32 in price, to yield 3.30, just shy of a session high of 3.31 percent, up from 3.26 percent earlier.

Read MoreHere's what changed in new Fed statement

Earlier, bonds extended gains on Wednesday after the U.S. government's auction of seven-year Treasury notes, the last of three debt auctions this week.

The Treasury Department auctioned $29 billion in seven-year notes at a high yield of 2.250 percent, the highest rate since April. Seven-year note yields rose to 2.34 percent after the announcement.

The bid-to-cover ratio, an indicator of demand, was 2.58, compared to a recent average of 2.55.

Indirect bidders, which include major central banks, were awarded 47.4 percent, the biggest slice since April. Meanwhile, direct bidders took their smallest share since July 2012 at 15.2 percent.

Benchmark yields gained momentum after data showed U.S. gross domestic product expanded at a 4.0 percent annual rate as activity picked up broadly, after shrinking at a revised 2.1 percent pace in the first quarter, according to the Commerce Department,

The data were tempered by the ADP private payrolls report, which showed weaker than anticipated job creation last month, setting the stage for Friday's non-farm payrolls report, which is also likely to feed near-term expectations of the economy.

—By Reuters with CNBC.com.

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