U.S. bonds pared some losses on Wednesday after the minutes of the U.S. Federal Reserve's latest policy meeting showed the central bank struggled over how to convey to investors how fast it will raise short-term interest rates once it increases them from record lows.
Two weeks before the Fed's regular meeting March 18-19, it held an unusual and previously unannounced videoconference to debate the issue, according to minutes of the meeting released Wednesday.
Benchmark 10-year Treasurys notes were last down 3/32 in price with a yield of 2.69 percent, while yields on the three-year, five-year and seven-year notes touched fresh three-week lows after the announcement.
The 30-year bond was down 20/32 in price for a yield of 3.57 percent, above its one-week low set on Tuesday.
Investors have been intensely following the Fed's guidance on rates because higher short-term rates would elevate borrowing costs and could hurt stock prices.
The minutes covered the first Fed meeting at which Yellen presided as well as the March 4 videoconference. At both sessions, the issue of the language the Fed uses in its statements to signal the timing of future policy actions was a topic of extended debate.
The Fed has kept its key short-term rate at a record low near zero since December 2008. It made no change to that rate at the March meeting. But it dropped language from its statement that had previously said this rate would likely remain low "well past" the time unemployment fell below 6.5 percent.
Earlier, the Treasury Department auctioned $21 billion in 10-year notes at a high yield of 2.720 percent, a six-month low. The bid-to-cover ratio, an indicator of demand, was 2.76 compared to a recent average of 2.64.
The bond market has settled in a tight range overnight following gains spurred by mildly weaker-than-expected March jobs data on Friday.
This week's $64 billion in coupon-bearing debt supply stalled the drop in benchmark yields, keeping them near some key technical trading levels, analysts said.
"Treasuries have had a good run. There's some risk with this week's supply," said Robert Tipp, chief investment strategist at Prudential Fixed Income in Newark, New Jersey.
With a short-term average holding below the longer-term average, the 10-year yield might have more room to fall, some analysts said.
The 30-year bond was down 12/32 in price for a yield of 3.56 percent, above its one-week low set on Tuesday.
—By Reuters. CNBC and AP contributed to this report