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US Treasury prices pare gains after FOMC statement

Market reaction to Fed decision
Bond market reaction to Fed
Fed keeps rates same

U.S. 10-year sovereign bond yields pared their gains on Wednesday following the announcement from the U.S. Federal Reserve.

The Federal Reserve opted Wednesday not to raise interest rates, despite painting a rosier economic picture than it did just a month ago.

Benchmark 10-year Treasury notes fell to yield 1.5166 percent. Before the meeting concluded, the yield was 1.5466 percent. Bond yields move inversely to prices.

Thirty-year bonds yielded 2.2302 percent on Wednesday versus the 2.2564 percent yield before the meeting.

Treasury yields

Bonds Front: U.S. Treasurys Chart

As expected, the Federal Open Market Committee kept its overnight interest rate target in the 0.25 percent to 0.5 percent range. However, it noted a labor market that has "strengthened" and said other indicators were pointing to growth.

The U.S. Treasury will auction $15 billion in two-year floating-rate notes on Wednesday.

The main U.S. economic data due was durable goods orders for June, which fell 4 percent, more than the 1.1 percent drop expected.

A monthly index of so-called pending home sales, based on signed contracts, rose just 0.2 percent in June compared to May and is just 1 percent higher than June 2015, according to the National Association of Realtors (NAR). The slight improvement puts sales at the second-highest level of the last 12 months, but considerably off this year's peak in April.

U.S. commercial crude in storage rose by 1.7 million barrels to a total of 521.1 million barrels in the week through July 22, the Energy Information Administration said. Analysts had expected a draw of 2.3 million barrels, reported Reuters.

U.S. West Texas Intermediate crude fell to as low as $41.95 a barrel, breaking through a three-month low of $42.36 reached on Tuesday.

U.K. Gilt yields declined on Wednesday after the country posted better-than-expected quarter-on-quarter growth of 0.6 percent for the period of April to June. The data was a preliminary estimate from the U.K.'s Office of National Statistics and only covers one week post the Brexit vote on June 23.

Japanese bond yields also fell on Wednesday, amid media reports suggesting the Japanese government would shortly launch a $265 billion fiscal stimulus package and the Bank of Japan was considering multiple monetary stimulus proposals. These include cutting interest rates further into negative territory, more bond-buying or expanding its stimulus program to include other assets such as exchange-traded funds, according to the Nikkei. The Bank of Japan will start its two-day policy meeting on Thursday.

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-CNBC's Jeff Cox and Diana Olick contributed to this report.