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Yields hit session highs on Fed's Lockhart comments

Treasury yields hit session highs on Tuesday after Atlanta Federal Reserve President Dennis Lockhart has said it would take "significant deterioration" in the U.S. economy for him to not support a rate hike in September, according to the Wall Street Journal.

"I think there is a high bar right now to not acting, speaking for myself," Lockhart said in an interview with the newspaper published on Tuesday. "It will take a significant deterioration in the economic picture for me to be disinclined to move ahead."

The yield on the benchmark 10-year Treasury notes was last trading at a session high of 2.209, up 6 basis points on the day. The two-year note yield jumped 6 basis points to 0.63 percent after Lockhart's comments.

The yield on the 30-year ticked higher to 2.887 percent after closing at 2.86 percent. When a bond's yield falls, its price rises.

Oil prices edged higher in London trading on Tuesday following a steep fall in the previous session, as a high global production and a weakening economic outlook, especially in Asia, prompted analysts to warn of further falls.

Read MoreMobius: Oil's fall is purely sentimental

Symbol
Yield
 
Change
%Change
US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
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US 10-YR
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US 30-YR
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Oil output by the Organization of the Petroleum Exporting Countries (OPEC) reached the highest monthly level in recent history in July, and production could rise further if Iran achieves a plan to raise output by 500,000 barrels per day (bpd) as soon as sanctions are lifted.

Prices rose on Tuesday, with Brent 50 cents higher at $50 a barrel and U.S. crude up 90 cents at $45 a barrel.

On the data front, June factory orders figures are due at 10 a.m. ET. On Wednesday, markets will be watching for the ADP employment report, which comes ahead of the labor report on Friday.

Investors will be watching August's data closely as it will likely indicate whether the U.S. Federal Reserve is getting ready to hike rates in September as many expect.

July ISM data also came in weaker-than-expected on Monday.

—Reuters contributed to this report.