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Treasurys turn higher as Ukraine tensions linger

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Benchmark U.S. Treasurys remained higher after the release of the Federal Reserve's Beige Book report on Wednesday.

In the report of anecdotal information on business activity collected from contacts across the nation, the central bank said six of its 12 districts reported economic growth as "moderate.''

Labor market conditions, as measured by hiring trends, were reported to be relatively unchanged from generally modest rates in most districts, the Fed said.

In afternoon trading, U.S 10-year Treasury notes rose 3/32 in price to yield 2.41 percent. Yields earlier hit 2.46 percent, the highest since Aug 13.

U.S. 30-year Treasury bonds gained 8/32 in price to yield 3.16 percent, having earlier climbed to a two-week peak of 3.21 percent.

Read MorePoroshenko's office:Ceasefire reached with Russia

Russian President Vladimir Putin said on Wednesday a deal to end fighting in eastern Ukraine could be reached this week, a clear attempt to show the West he was trying to deescalate the conflict despite renewed shelling.

Read MoreDeutsche's Jain skeptical on need for ECB QE

"There has been a step forward on this end," said David Keeble, global head of interest rates strategy, at Credit Agricole in New York. "Putin does seem to be making the right noises and that hasn't been seen for a long, long time."

At the same time, Treasury yields were boosted by an onslaught of U.S. corporate debt issuance in September, after a quiet summer. There were about $21 billion in U.S. corporate bond issues announced on Tuesday and more new deals were identified on Wednesday, including a $1.25 billion bond issue from Lowe's Cos.

U.S. corporate bond supply have pushed the entire yield spectrum higher, Keeble said.

"The corporate supply calendar is pretty heavy," said Keeble. "The docket is filling up quite quickly, as well, and that is putting a little upward pressure on yields."

Read MoreConfusion over eastern Ukraine cease-fire

—By Reuters

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