U.S. Treasury prices fell modestly on Thursday after new economic data showed an uptick in core inflation.
Fixed income traders extended a recent selloff in bonds, which has taken benchmark yields to five-year highs.
The slight increase in year-on-year core producer prices, which exclude food and energy costs, reinforced investor expectations that the Federal Reserve will not need to cut benchmark interest rates any time soon and may even consider boosting rates.
Benchmark 10-year Treasurys were trading lower in price, sending yields up two ticks to 5.22% from 5.20% late Wednesday.
The Producer Price Index for May rose 0.9%, above analysts' forecasted rise of 0.6%, while core PPI for May rose on a year-over-year basis by 1.6% from an increase of 1.5% in April.